Asian markets soared to record highs as optimism grew around potential US-Iran peace negotiations, with MSCI's broadest Asia-Pacific index outside Japan rising 2.3% and South Korea's Kospi jumping 5.1% and clearing the 7,000-mark for the first time. According to Bloomberg, Iran is evaluating a new proposal from the US to end their near 10-week war, with a person familiar with the matter confirming that if Tehran accepts the terms, it will lead to a gradual reopening of Hormuz and lifting of the American blockade on Iranian ports. Nasdaq 100 futures jumped 1.3% while S&P 500 futures gained 0.8%, with both gauges set to build on record highs. The surge was led by South Korea's Kospi, which jumped 5.1% and cleared the 7,000-mark for the first time. US President Donald Trump hailed 'great progress' toward a 'final deal' with Tehran, saying he would temporarily pause operations of escorting ships through the Strait of Hormuz. The Strait of Hormuz carries a fifth of all global oil, and Iran has blocked it since late February, triggering a global energy shortage.
The potential peace agreement caused a sharp correction in crude oil prices, with West Texas Intermediate crude falling 7.8% to $94.33 per barrel and Brent crude dropping 6.8% to around $102 per barrel. According to Bloomberg, hopes that flows through Hormuz will resume sent Brent down 6.8% to around $102 a barrel, though a bigger drop earlier pared after President Donald Trump warned Iran to agree to the plan or face 'bombing'. The plan reportedly involves Iran committing to a moratorium on its nuclear enrichment programme in exchange for Washington pledging to lift sanctions and release billions in frozen Iranian funds, with both sides agreeing to ease restrictions around the Strait of Hormuz. Futures on Brent crude fell by as much as 11% to briefly dip below $100 per barrel after only a week ago crossing $126 per barrel. The global benchmark has climbed by about 50% since the conflict started at the end of February, cutting off hundreds of millions of barrels of Persian Gulf oil from global markets.
The rally came after both S&P 500 and Nasdaq Composite indices rose to fresh record highs on Tuesday, with March-quarter earnings from tech majors coming in above Wall Street estimates. As reported by LiveMint, S&P 500 companies are now on track to post aggregate earnings growth of 28% year-on-year for the first quarter, the strongest quarterly profit growth since 2021. The S&P 500 and Nasdaq have recovered 16% and 18% respectively from their March lows, with the strong earnings helping both indices reach record highs. Earlier this week, Iranian Foreign Minister Abbas Araghchi said talks were 'making progress' but warned that the US and the United Arab Emirates 'should be wary of being dragged back into a quagmire.' Roughly 85% of reporting S&P 500 companies have exceeded profit expectations, while about 77% have delivered upside revenue surprises, with upbeat investor sentiment supported by a steady stream of earnings beats.
Advanced Micro Devices surged 17% after data center spending bolstered its sales forecast, according to Bloomberg. The company also beat expectations on the top and bottom lines in the first quarter and issued a rosy outlook for the second quarter. Across the globe, Samsung Electronics jumped 16% in South Korea to reach a $1 trillion market value, while AI-linked names like Intel and Micron Technology also moved higher. The report lifted the broader chipmaker sector, with Intel popping 4% and the VanEck Semiconductor ETF (SMH) jumping 3%. Supermicro (SMCI) advanced 13% as improved margins lifted the firm's earnings. The brokerage noted that 'the AI trade is clearly back in full force' and highlighted that deal activity is picking up, with Alphabet raising billions to fund AI investments and SpaceX planning a massive semiconductor facility. SpaceX is proposing to spend $55 billion to begin construction of a new semiconductor production facility in Texas, taking steps toward realizing an ambitious project he's dubbed Terafab. Nvidia Corp. has bought $500 million worth of rights for shares in the fiber-optic cable maker Corning Inc.
The rally extended across global markets, with Europe's Stoxx 600 up 2.2% in an advance led by auto and leisure stocks, and the MSCI World Index rising 0.5%. According to Bloomberg, the yield on 10-year Treasuries dropped seven basis points to 4.36% as money markets cut back on bets of a 2026 US interest-rate hike. The dollar hit the lowest level since February, while the euro rose 0.6% to $1.1760 and the British pound rose 0.6% to $1.3618. Gold briefly topped $4,700 an ounce and Bitcoin rose for a seventh straight day to $82,442.32. In Japan, the yen touched its highest level against the dollar in more than two months, spurring speculation that officials may have intervened again after stepping in to prop up the currency last week. Carnival Corp. and United Airlines Holdings Inc. both jumped around 7%, with shares in miners and cruise line operators also gaining. As Bloomberg strategist Cameron Crise noted, 'It's possible that much of the 'progress' that the market is trading off of could still be foiled, but if oil prices remain at current/lower levels, the biggest winners will be government bonds, gold, and currencies like the yen,' which have demonstrated the greatest sensitivity to crude prices recently.
