Markets are back to hoping for a resolution to the Iran war, seizing on a few positive words from Washington and Tehran, even as both sides said they remain far apart on the critical issues of nuclear enrichment and control over the Strait of Hormuz.
Stocks rose after U.S. Secretary of State Marco Rubio said there had been "some good signs" in talks to end the nearly three-month-old war.
An oil tanker docked at the Port of Fujairah, as the U.S.-Israel conflict with Iran limits marine traffic in the Strait of Hormuz, in Fujairah, United Arab Emirates, May 6, 2026. REUTERS/Amr Alfiky/File Photo
However, he also said any deal that involved Iran imposing a toll system in the crucial strait would be unacceptable, and Iran's Supreme Leader ordered that the country's near-weapons-grade uranium should not be sent abroad.
The conflicting messages out of the U.S. and Iran have added to uncertainty, keeping the U.S. dollar near a six-week high on safe-haven demand, and with investors pricing in higher rates in much of the world because of inflation.
Bond yields were relatively calm on Friday after surging across the world earlier this week due to shifting interest rate expectations. Markets are pricing in the prospect of hikes by the U.S. Federal Reserve later this year.
Graphics are produced by Reuters
Asia bears the brunt
In Asia, where the oil shock has hit hardest, central banks have already started to move, with Indonesia surprising markets earlier this week with a jumbo hike that provided temporary relief to the rupiah .
The Philippine central bank is considering an off-cycle hike as its move in April "didn't seem enough", its governor said.
Europe's calendar is filled with economic data and a sentiment survey from Germany that may provide investors with a better sense of the deep impact from the Middle East war.
Earnings from Walmart showed how the oil shock has sent bargain-hunting shoppers flocking to the retailer's low-priced groceries and essentials. U.S. retailers have flagged growing pressure on consumer spending this year.
Key developments that could influence markets on Friday:
Economic events: Germany Q1 GDP, Ifo business sentiment survey for May
UK retail sales for April
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