Equities Hit Fresh Highs While Oil Stabilizes on Expectations of US-Iran Agreement
Global equities rallied to fresh record highs as optimism surrounding a potential US-Iran agreement boosted investor sentiment and eased concerns over prolonged disruptions in the Middle East. The MSCI All Country World Index advanced 0.3%, while Asian markets outperformed with the MSCI Asia gauge jumping 1.9%. Japan’s Nikkei 225 surged to a new intraday high as markets reopened after the holiday break, led by strong gains in technology shares. Meanwhile, Taiwan equities climbed more than 2%, and South Korea officially overtook Canada to become the world’s seventh-largest equity market by market capitalization.
Investor confidence strengthened after reports suggested that intensive diplomatic communications are underway to gradually reopen the Strait of Hormuz. According to regional media reports, the coming hours could witness a breakthrough regarding ships currently stranded in the strait. Adding to the geopolitical developments, Iran signaled that its ports are fully prepared to support commercial maritime activity, while President Donald Trump stated that discussions with Iran had been “very good” and that a deal to end the conflict was “very possible.”
Oil markets remained highly volatile but stabilized after Wednesday’s sharp decline. Brent crude traded near $102 per barrel, while US crude held around $95 after suffering its largest drop in months during the previous session. Traders increasingly priced in the possibility that easing tensions between Washington and Tehran could restore smoother oil transit through the Strait of Hormuz and reduce supply concerns. Earlier reports that a Chinese oil tanker had been attacked in Hormuz on May 4 highlighted the fragile security environment in the region.
Wall Street also extended its rally, with the S&P 500 climbing 1.5% to another record close as more than 80% of reporting companies exceeded earnings expectations this season. Technology stocks remained the key driver of gains, with chipmakers rallying strongly after upbeat corporate earnings, particularly from Advanced Micro Devices. Falling oil prices and easing inflation fears also boosted risk appetite, helping Treasury yields decline while the US dollar weakened back toward pre-conflict levels. Gold prices, however, continued to attract safe-haven demand amid lingering geopolitical uncertainty.
In currency markets, the Japanese Yen stayed in focus after surging earlier this week on speculation that Japanese authorities intervened in the market. The Yen traded near 156.30 against the Dollar in Asian trading, while Japanese officials reiterated they stand ready to respond to excessive speculative moves in foreign exchange markets.
Meanwhile, diplomatic efforts between the US and China also showed signs of stabilization. China’s top diplomat Wang Yi met with US Senator Steve Daines in Beijing, where both sides emphasized de-escalation, stability, and mutual respect. However, geopolitical risks remain elevated after Israeli defense forces reported intercepting suspicious aerial targets launched from Lebanon toward northern Israel.
Overall, financial markets continue to price in a more constructive geopolitical outlook, with easing Middle East tensions, resilient corporate earnings, and fading inflation fears collectively driving global risk assets toward new highs.
By Amir Amidian
Senior Market Analyst | Zylostar
