Asian markets opened with a dramatic surge as traders responded aggressively to reports that the United States and Iran are closing in on an agreement to end the Gulf war. According to reports from Reuters, MSCI's All-Country World Index climbed 1.24% to a fresh record, with Europe's STOXX 600 index extending gains and rising 2.1% after climbing 0.7% a day earlier. The rally was driven by reports of potential diplomatic progress between Washington and Tehran, with Wall Street continuing its momentum as the Dow Jones Industrial Average added 600+ points to 49,744.78 and the Nasdaq Composite advanced 2% as of latest trading. As Michael Brown, senior research strategist at Pepperstone, noted, "A pretty punchy move on the back of those stories, almost as if the market has shifted into 'buy everything' mode." However, optimism remained fragile as President Trump later flagged uncertainty around the deal, calling it a "big assumption," and warned of escalation if talks failed, causing markets to trim some gains following his remarks. According to CNBC TV18, the Dow Jones is now another 600 points away from its own record high of 50,512, with the S&P 500 closing above the 7,350 mark for the first time and the Nasdaq reaching near the 26,000 mark. The latest developments show Washington has presented a one-page memorandum of understanding that would gradually reopen the Strait of Hormuz and lift the American blockade on Iranian ports, according to a person familiar with the measure, with Trump saying the war has "a very good chance of ending" and there's a possibility that happens before his trip to Beijing next week.
The primary catalyst for the market rebound was the Brent crude dropping 7% to just above $101 a barrel, as reported by CNBC TV18. According to Associated Press, oil had become the beating heart of the inflation scare, capable of infecting every other cross-asset correlation on the screen. Once crude began to soften, the entire macro machine immediately recalibrated, with bond yields backing off and the dollar losing altitude. The market was already structurally leaning bullish before the geopolitical temperature cooled, and the AI trade had never truly died despite crude threatening to turn every inflation forecast into confetti. Now that energy prices are retreating, the market is reconnecting to the narrative of lower input costs and easier inflation dynamics. However, oil prices briefly dove below $100 before returning above $101 after President Trump threatened to start bombing "at a much higher level and intensity" if Iran does not accept the agreement. West Texas Intermediate (WTI) crude fell about 7% to hover above $95 per barrel, while Brent crude slipped a similar margin to trade just above $101, briefly dipping below that level as traders unwound risk bets. The US Dollar has plunged to pre-war lows, reversing all the gains made earlier, according to CNBC TV18. Helping the sentiment was Brent crude sliding almost 8% on Wednesday to just above $101 a barrel, sparking a rally in US and global bonds, with gold jumping and the dollar falling to pre-war levels during the US session. Brent crude opened higher on Thursday after the previous day's dramatic decline, reflecting continued market volatility around the Iran situation.
The rally was not simply a tech rally but a coordinated reprising of fear, with the market rewarding scale, silicon, and electricity consumption as though the future itself has become a listed security. According to Associated Press, AMD helped lead the market with a surge of 15% after it delivered a strong earnings beat and issued an upbeat outlook on the back of robust demand for its data-centre chips. CEO Lisa Su noted that the chip company benefited from continued growth from artificial-intelligence technology, which is demanding tremendous amounts of computing power from data centers. AMD also said its revenue growth could accelerate in the current quarter to roughly 46% from a year earlier. Super Micro Computer rallied sharply following strong guidance, while Intel added close to 2% and the VanEck Semiconductor ETF gained about 3%. Alphabet gained 1.5% and the Philadelphia SE Semiconductor Index rose 2.9% to hit another record high. Disney jumped 8.3% after the entertainment giant's "Zootopia 2" movie helped draw people to its streaming business, parks and cruise ships. Uber Technologies drove 7.6% higher after giving a bookings forecast for the spring that was higher than analysts expected. According to CNBC TV18, the Philadelphia Semiconductor Index closed at record high levels on Wednesday, with nine out of the 11 S&P 500 sectors now turning positive on a year-to-date basis, while Financials and Healthcare are the only two underperformers so far this year.
The AI boom is reshaping market leadership globally, with Samsung Electronics crossing the $1 trillion market cap milestone, becoming only the second Asian company after TSMC to do so, driven by surging demand for high-bandwidth memory used in AI systems. According to CNBC TV18, around 85% of S&P 500 companies have beaten profit estimates so far, while roughly 77% have topped revenue expectations, reinforcing the resilience of corporate performance despite global tensions. The earnings data provides strong backing for the AI-fuelled momentum that continues to drive market sentiment. The 10-year U.S. Treasury yield fell to 4.35% from 4.43% as yields on government bonds fell along with oil prices as traders dialled down their bets on central bank rate hikes. However, beneath that rally lies an uncomfortable reality that traders are still assigning a higher probability to another rate hike than to a cut, indicating the inflation psychology remains deeply scarred by the energy shock. Clients at Bank of America purchased US equities worth $6.8 billion last week, according to CNBC TV18. JPMorgan strategists including Nikolaos Panigirtzoglou wrote in a note that "We believe that institutional investors and in particular macro managers have room to further increase their equity exposures from here."
The rebound is remarkable for how narrow the previous selloff had been, with the Iran war correction concentrated into a small cluster of macro-sensitive exposures while much of the underlying market simply paused rather than broke. According to Associated Press, "Market participants, though, aren't going to wait for confirmation of good news and are essentially now front-running a positive outcome." The market is effectively betting that the Strait of Hormuz scare will ultimately be remembered as a violent but temporary inflation pulse rather than the beginning of a broader systemic fracture. The S&P 500 recorded 36 new 52-week highs, while the Nasdaq posted 115 new highs, with advancing stocks outnumbering decliners by 2.27-to-1 on the NYSE and 1.54-to-1 on the Nasdaq. However, hopes have risen several times already on Wall Street about a possible end to the war with Iran, only to quickly get dashed, which could happen again. As Kyle Rodda, senior financial market analyst at Capital.com, noted, "Wall Street continues to double down on its bet that the war in the Middle East will not re-escalate and disrupt the market's earnings-driven surge to all-time highs." For now, markets appear to be balancing two opposing forces—geopolitical uncertainty and AI-fuelled earnings momentum, and as long as the latter holds, equities seem willing to look past the noise. The Nikkei 225 Index climbed 3.4%, with gauges in Australia and South Korea also rising on speculation easing of tensions in the Middle East will lower oil prices and help lift economic growth, with the broader MSCI Asia Pacific Index advancing 0.6%. Attention is also on the yen, which steadied around 156.35 per dollar early Thursday after strengthening in the prior session amid speculation that officials are intervening in the market.
