Global stocks hit record on Iran bets, dollar ebbs: Markets wrap

Global equities climbed to a new all-time high as investors piled back into stocks on signs the US and Iran may extend a ceasefire, helping markets unwind war-driven risk premiums.

The MSCI All Country World Index — the broadest measure of global shares — rose as much as 0.3% to a record, and headed for a 10th day of gains. That’s the longest winning streak since September. Asian shares rose 1.3% to almost erase their war-driven losses, as optimism over a potential US-Iran ceasefire and robust US corporate earnings boosted sentiment.

Asian stocks rallied after Wall Street gauges also closed at record highs with traders betting a de-escalation of the Middle East conflict will push down oil prices and boost economic growth. Equity-index futures indicated the rally will extend in Europe.

Helping sentiment, global crude benchmark Brent held around $95 a barrel, well below last month’s peak of nearly $120. As Middle East tensions cooled, the dollar — which emerged as the haven of choice during the conflict — weakened, with the Bloomberg Dollar Spot Index set for a ninth day of declines, its longest losing streak since December 2006.

The MSCI All Country index, which had dropped as much as 9% from the start of the war through to its low on March 30, erased all those declines on expectations the US and Iran will eventually reach a peace deal. Renewed enthusiasm for technology stocks has also helped drive the reversal from last month’s selloff, which pushed several gauges into technical correction.

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“Traders across Asia are clinging tightly to the hope that a new round of US-Iran peace talks will materialize in the coming days,” said Tim Waterer, chief market analyst at KCM Trade. “The sight of oil trading at sub-$100 levels and hopes of a diplomatic breakthrough are combining to breathe life back into equities.”

The US and Iran are considering extending their ceasefire that ends on Tuesday by another two weeks to allow more time to negotiate a peace agreement, according to a person familiar with the matter.

Mediators between the two sides are trying to set up technical talks to resolve the most contentious issues, said the person, who asked not to be named, discussing sensitive matters. Those include reopening the Strait of Hormuz and Iran’s nuclear enrichment.

What Bloomberg Strategists Say…

“The major equity indexes across Asia are enjoying another buoyant session with investors switching focus back to the earnings power of major companies, as the war in Iran moves into the background. Moreover, the friction between short-term inflation pressures and medium-term economic growth risks is keeping bond yield curves in a holding pattern, which is another positive input into stocks.”

— Mark Cranfield, MLIV.

Elsewhere, gold rose 0.6% to about $4,820 an ounce, while silver jumped 1.5% to about $80 an ounce. Treasuries advanced, with the benchmark 10-year yield falling one basis point to 4.27% as lower oil prices eased concern about quicker inflation.

The Australian dollar rose to the highest since June 2022 amid broad weakness in the greenback. The yen strengthened after Japan’s top currency official Atsushi Mimura said Japan and the US confirmed they would work on foreign exchange. Shares in China held gains after a report showed economic growth rebounded more than expected in the first quarter.

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“Markets are just returning back to pre-war flows and positioning as market has looked past the war and moved on from conflict despite not being resolved,” said Matthew Haupt, a portfolio manager at Wilson Asset Management. “From here we need new news for direction to go higher as this systematic buying is largely done.”

The prospect of renewed negotiations has helped sustain a broader risk-on tone across markets. Emerging-market stocks extended gains with the MSCI Emerging Markets Index climbing 1% on Thursday.

Benchmarks in Singapore and Taiwan, China’s CSI 300 Index as well as the MSCI Latin America Index, have all reversed losses that came after the US and Israel attacked Iran. Also, Taiwan overtook the UK in stock market value as the island’s tech firms regained favor.

History of geopolitical crises shows that crises “turn out to be great buying opportunities,” said Ed Yardeni or Yardeni Research. “That’s the situation we are in right now.”

Corporate News:

The Trump administration wants automakers and other American manufacturers to play a larger role in weapons production. Senior defense officials have held talks about producing weapons and other military supplies with the top executives of companies, including General Motors and Ford, the Wall Street Journal reported.
Four of the six largest US banks reduced their headcount during the first three months of the year, with Wells Fargo & Co leading the way with more than 4 000 cuts, while JPMorgan Chase & Co and Morgan Stanley added staff.
Contemporary Amperex Technology Co. is planning to expand its footprint in critical minerals and strengthen supply-chain security.

S&P 500 futures rose 0.1% as of 2:01 p.m. Tokyo time
Nikkei 225 futures (OSE) rose 2%
Japan’s Topix rose 1.1%
Australia’s S&P/ASX 200 fell 0.4%
Hong Kong’s Hang Seng rose 1.3%
The Shanghai Composite rose 0.5%
Euro Stoxx 50 futures rose 0.2%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1809
The Japanese yen rose 0.2% to 158.73 per dollar
The offshore yuan was little changed at 6.8153 per dollar

Cryptocurrencies

Bitcoin was little changed at $74 926.9
Ether fell 0.4% to $2,352.85

Bonds

The yield on 10-year Treasuries declined one basis point to 4.27%
Japan’s 10-year yield was little changed at 2.410%
Australia’s 10-year yield advanced three basis points to 4.96%

Commodities

West Texas Intermediate crude rose 0.5% to $91.77 a barrel
Spot gold rose 0.9% to $4,833.48 an ounce

This story was produced with the assistance of Bloomberg Automation.

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