World shares are mixed following signing of US-Iran deal on ending war

BANGKOK: World shares were mixed on Thursday, with benchmarks in Japan and South Korea setting fresh records, after the US and Iran signed their initial agreement ending the war.

The rally in Asia followed a retreat Wednesday on Wall Street driven by speculation the Federal Reserve may raise interest rates this year to curb inflation.

US futures were higher early Thursday, while oil prices fell.

Leaders from the US and Iran signed the deal on a permanent end to hostilities that starts a 60-day negotiating clock to reach a final deal on the future of Iran's nuclear program. In the meantime, it calls for Tehran to dilute its stockpile of highly enriched uranium.

The deal waives US-backed sanctions on the country, immediately allowing Iran to sell its oil freely in a major concession from Washington, according to details released by both countries.

The news came after US markets closed with losses for the day.

In early European trading, Germany's DAX edged 0.2 per cent higher to 24,987.35, while the CAC 40 in Paris edged 0.1 per cent lower, to 8,424.47. Britain's FTSE 100 shed 0.8 per cent to 10,422.40.

The future for the S&P 500 was up 0.9 per cent, while that for the Dow Jones Industrial Average gained 0.6 per cent.

During Asian trading, Tokyo's Nikkei 225 resumed its climb, gaining 1.7 per cent to a new closing high of 71,053.49. It topped 70,000 for the first time this week and is still gaining thanks to hopes for an end to the war and strong buying of high-tech shares due to the artificial intelligence boom.

"This is very broad-based rally, I believe it's actually showing some confidence that the Japanese economy is going to recover further from the ... the end of the war, and presumably the oil prices in the near future,” said Neil Newman, head of strategy at Astris Advisory Japan.

South Korea likewise has been setting records, gaining 2.3 per cent to 9,063.84. The Kospi has roughly tripled in the past year, helped by gains for computer chipmakers Samsung Electronics and SK Hynix. Samsung's shares rose 4.6 per cent and those of SK Hynix gained 6.5 per cent.

Taiwan's Taiex jumped 1.3 per cent.

In Hong Kong, the Hang Seng lost 2.1 per cent to 23,792.35, while the Shanghai Composite index edged 0.4 per cent lower to 4,090.48.

Australia's S&P/ASX 200 slipped 0.6 per cent to 8,911.10.

On Wednesday, the S&P 500 slumped 1.2 per cent after the Fed released projections showing nearly half its policymakers foresee at least one increase to its main interest rate in 2026.

The Dow dropped 1 per cent and the Nasdaq composite sank 1.3 per cent.

Higher interest rates can tap the brakes on inflation, but they also slow the economy and hurt prices for investments. For much of the past year, the expectation has been that the Fed would be cutting rates.

In his first news conference as head of the US central bank, Kevin Warsh, did not give a forecast for where the federal funds rate may end 2026. He said he's considering a revamp of how the Fed communicates with financial markets and US households and businesses.

One of his first moves was to end the inclusion of hints in Fed statements about where interest rates may be heading in the future.

In the stock market, SpaceX erased an early gain and fell 4.9 per cent for its first loss since its ballyhooed debut on the US stock market last week.

Drops of 3.8 per cent for Microsoft, 3.5 per cent for Amazon and 1.3 per cent for Nvidia were three of the heaviest weights on the S&P 500.

A report said revenue at retailers across the country grew at a faster pace in May than economists expected.

Oil prices were steadier Wednesday following slides earlier in the week on optimism about the tentative US-Iran deal to get the global flow of oil going again. Iran is set to take steps to reopen the Strait of Hormuz, allowing oil tankers to deliver crude from the Persian Gulf again and hopefully relieve inflationary pressures.

Early Thursday, the price for a barrel of Brent crude oil fell 1.9 per cent to USD 78.05. It's still above its roughly USD 70 price from before the war, but it's well below its USD 100-plus price from a few weeks ago.

US benchmark crude slipped 2.1 per cent to USD 74.43 per barrel.

The US dollar fell to 160.63 Japanese yen from 160.65 yen. The euro was trading at USD 1.1510, up from USD 1.1501.