World shares near record highs on simmering geopolitics

Global stocks are hovering near record peaks as international tensions simmer ?and the dollar holds near a six-week high while traders trim bets on Federal Reserve interest rate cuts.

Safe-haven gold fell, while oil prices rebounded from an earlier retreat after ?US President Donald Trump adopted a wait-and-see attitude towards Iran, having earlier threatened intervention.

International politics has been the major focus for markets since the start of 2026 following Trump's action ?in Venezuela and threats to take over Greenland.

"Although it appears that we've sort of dialled down the probability of US intervention in the Middle East for the time being, I don't think we can entirely rule that out," Michael Brown, senior research strategist at Pepperstone, said.

Market participants might lack conviction before the Martin Luther King Jr Day US holiday on Monday, Brown said.

"I wouldn't be entirely confident if I was running a book to be long-risk or short-crude into ?a three-day weekend with ?this amount of Middle East tension going on," he said.

The pan-European Stoxx 600 index was flat on Friday after notching a record high on Thursday.

France's ?CAC 40 was 0.4 per cent lower, underperforming regional peers on political uncertainty.

The French government on Friday postponed talks about its 2026 budget as MPs failed to reach a compromise.

US stock futures pointed to a firm start on Wall Street, where an earnings-packed week will end with State Street results.

In Asia, tech-heavy indices in Taiwan and South Korea notched record peaks as stellar results from Taiwanese chipmaker TSMC revived the AI trade.

The US and Taiwan clinched a trade deal on Thursday that cuts tariffs on many of the ?semiconductor powerhouse's exports, directs investments towards the US technology industry and risks infuriating China.

The yen grabbed the spotlight in the currency markets after Japanese Finance Minister Satsuki Katayama said ?on Friday Tokyo would not rule out any options to counter excessive foreign exchange volatility, including co-ordinated intervention with the United States.

Her comments lifted the yen slightly.

The currency extended gains after a Reuters report that some Bank of Japan policymakers see scope to raise interest rates sooner than markets expect, with ?April ?a distinct possibility.

The dollar was last down 0.3 per cent at 158 ?yen.

The yen has been sold off on the prospect of a snap election ?in Japan as early as February, which investors bet could lead to expanded fiscal stimulus from Prime Minister Sanae Takaichi.

The dollar hovered near a six-week high after US economic releases this week including data that showed the number of Americans filing new applications for unemployment benefits unexpectedly fell last week.

Against a basket of currencies, the dollar stood at 99.28, close to Thursday's peak of 99.493, its highest since early December.

Markets have priced in a 20 per cent chance of Fed rate cut in March, down from roughly 50 per cent a month ago.

In oil markets, prices rose slightly as supply risks remained in focus despite the receding likelihood of a US military strike against Iran.

Brent crude and US West Texas Intermediate both traded ?just more than one per cent higher.

Spot was down 0.12 per cent about $US4,609 an ounce.