Asian stocks rose on Friday, poised for their strongest week in two months as benign inflation data dented expectations of an imminent US rate hike, although faltering talks to end the war in the Middle East are likely to keep risk sentiment in check.Brent futures steadied at $87.03 per barrel after a drop on Thursday but were set for a 4 percent weekly gain, snapping a two-week losing streak, after the US threatened to ramp up economic pressure on Iran, including extending a naval blockade.
Markets have so far shrugged off the lack of progress in ending the Iran war, instead focusing on the broad AI theme and the global monetary policy outlook.
US inflation reports this week suggested pricing pressure remained under control, lowering the odds of a rate increase from the Federal Reserve next month.
Charu Chanana, chief investment strategist at Saxo, said risk appetite can hold for now because the immediate Fed hike risk has been repriced lower, noting softer oil is also helping.
"But this is still a headline-driven rally rather than a clean risk-on regime," said Chanana. "Without clarity on the Middle East/Hormuz, another oil spike could quickly revive inflation and Fed concerns."
