Global stocks hovered around record highs on Friday, set for a third straight weekly gain after benign US inflation data dented expectations for a rate hike next month, even as faltering Middle East peace talks pushed oil prices higher, Reuters reported. Oil and gas were still headed for sizeable weekly gains as the impasse over a peace deal continued and the US threatened to ramp up economic pressure on Iran, including extending a naval blockade. Yet investors showed no signs of alarm: short-dated yields rose only modestly, market-based inflation expectations kept trending lower, and gold touched two-month highs. The focus remained on the AI theme after strong earnings soothed worries about heavy AI spending. The MSCI All-World traded just below record highs, while Europe's STOXX 600 slipped slightly as tech losses were offset by gains in defence and carmakers.

Capital.com strategist Kyle Rodda said geopolitical uncertainty remains the only major macro roadblock to a market benefiting from strong earnings and the monetary-policy outlook, according to Reuters. Brent crude rose 1.7% to $88.50 a barrel, heading for a 6% weekly gain, while the VIX was set for a fourth straight weekly fall, its longest such stretch since May 2025. Federated Hermes' John Sidawi noted a growing disconnect between geopolitical uncertainty and asset-price volatility, warning the equilibrium is unlikely to last. The yen strengthened, leaving the dollar down 0.2% at 159.18 after a Reuters report that the Bank of Japan could raise rates as soon as September, though it remains within sight of the 160 level traders think could trigger fresh intervention. ING's Padhraic Garvey attributed the yen's weakness to an overly cautious BOJ and a policy rate that is still too low. Gold eased 0.1% to $4,346 an ounce but is set for its biggest monthly gain since February.