Asian stock markets rose on Friday amid hopes of a US-Iran deal and strong guidance from Nvidia linked to data centre demand and agentic AI. The Nikkei 225 was up 2.8% at around 63,400, Shanghai rose to 4,110, the Hang Seng gained 1.2% to near 25,700, and the Nifty 50 added 0.5% to near 23,780.
Iranian Labour News Agency (ILNA) reported that a final draft between the US and Iran had been reached with Pakistan mediation, with a deal possible within hours. Reports also noted that Iran continued to stress holding uranium stockpiles and organising a toll system over the Strait of Hormuz.
Market Focus Shifts To Nvidia And Ai
Nvidia’s CEO Jensen Huang said agentic AI has arrived and that AI factory buildouts are accelerating, according to CNBC. He also said Nvidia’s platform runs frontier AI models including Anthropic, OpenAI, SpaceXAI, Meta and Google’s Gemini.
Attention is also on the US Federal Reserve outlook, with the CME FedWatch tool showing 50.8% odds of rates being held at current levels and 48.1% odds of at least one rate rise this year.
Artificial intelligence covers fields such as neural networks, machine learning, deep learning, and natural language processing, with a stated goal of artificial general intelligence (AGI). AI uses include ChatGPT, Google’s Bard, Midjourney, AI-based lending assessments, drug discovery, and recommendation systems from platforms such as YouTube, Spotify and Facebook.
Looking back at the optimism from 2025, the landscape has shifted significantly. We recall the market excitement when a tentative US-Iran deal was announced, but that accord is now showing signs of strain amid reports of renewed uranium enrichment. Consequently, crude oil volatility, which had calmed to a 12-month low of 22% in early 2026, has ticked back up to 35%, suggesting that buying call options on Brent crude futures could be a prudent hedge against a full breakdown of the agreement.
Risk Management Strategies In Volatile Markets
The agentic AI narrative powered an incredible rally through last year, just as Nvidia’s strong guidance suggested. That momentum has pushed valuations into territory that now mirrors the dot-com era, with the Nasdaq 100’s forward price-to-earnings ratio recently hitting 38, up from 25 in mid-2023. We believe the risk of a sharp correction in the tech sector has grown substantially, even if the long-term AI story remains intact.
Given these stretched valuations and elevated implied volatility, we are advising a more defensive stance on technology. Purchasing long-dated put options on major tech ETFs like the QQQ provides a cost-effective way to protect portfolios against a potential 10-15% pullback over the next six months. For those holding large positions in names like Nvidia, selling out-of-the-money covered calls can generate income while providing a small buffer against downside risk.
The monetary policy outlook is also far less certain than it was a year ago. That 50/50 split we saw in 2025 regarding the Federal Reserve’s next move has been replaced by renewed inflation fears, with the latest CPI data for April 2026 coming in hotter than expected at 3.8%. The CME FedWatch tool now shows markets are pricing in a 65% chance of a rate hike by September to combat this persistent inflation.
This renewed hawkish sentiment makes fixed-income assets vulnerable. The uncertainty surrounding the Fed’s path creates an opportunity in interest rate derivatives. We see value in buying put options on long-duration Treasury bond ETFs, as a surprise rate hike or continued stubborn inflation could trigger a significant sell-off in bonds.
