Nikkei Hits 34 Year High, Oil Prices Rise Amid Middle East Crisis

Japanese stocks reached 34-year highs on Feb 9, and the S&P 500 closed at a record high, while oil prices were set to rise sharply this week following Israel's rejection of Hamas' cease-fire offer. Asia's trade was lightened by the closure of Chinese markets for the Lunar New Year holiday, as well as a shortened session in Hong Kong.

The Hang Seng, on the other hand, fell 2% this morning, with traders frustrated by a long and so far fruitless wait for Beijing to unleash stimulus or support for China's ailing markets. The Nikkei rose 1%, aided by a falling yen, which traded near its lowest level in two months at 149.37 per dollar in Asia morning.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat and on track for a 0.7% weekly gain, marking its longest weekly winning streak since June. On Thursday, the S&P 500 reached 5,000 and closed at a record high. Brent crude futures rose 3% on Thursday and are up more than 5.5 percent this week on concerns that the ongoing conflict in the Middle East is disrupting shipping and threatening a direct confrontation between the United States and Iran.

"Netanyahu's outright rejection of a potential cease-fire, combined with a US drone strike on a high-ranking Kataib Hezbollah official in Baghdad, have increased those risks," said National Australia Bank's head of commodity strategy, Robert Rennie.