Asian equity markets experienced a widespread rally on Thursday, propelled by renewed optimism surrounding diplomatic efforts in the Iran conflict and a record-setting performance on Wall Street. Oil prices steadied as traders assessed the potential for an extended ceasefire agreement.
Regional Indexes Post Significant Gains
Japan's Nikkei 225 index surged by 2.4% to reach 59,549.59, while South Korea's Kospi climbed 2% to 6,215.38. In Hong Kong, the Hang Seng index rose 1.2% to 26,269.99, and the Shanghai Composite increased by 0.6% to 4,050.42. Taiwan's Taiex traded 0.9% higher, though Australia's S&P/ASX 200 edged down marginally by 0.1%.
China's Economic Growth Accelerates
The positive momentum in Chinese markets coincided with the release of economic data showing the country's economy expanded by 5% during the January-March quarter, marking an acceleration from the previous period. While analysts note that China has largely weathered the initial economic impacts of the Iran war, concerns persist regarding potential headwinds for its substantial export sector amid forecasts of slower global economic growth in the coming months.
Diplomatic Developments Influence Markets
Market sentiment received a significant boost from reports indicating that the United States and Iran have reached an "in principle agreement" to extend a two-week ceasefire set to expire next week. Regional officials confirmed to The Associated Press that progress is being made toward organising another round of talks between the two nations.
However, U.S. Treasury Secretary Scott Bessent simultaneously issued a warning that Washington is preparing to implement secondary sanctions against entities conducting business with Iran, potentially including Chinese companies purchasing Iranian oil. This move aims to intensify economic pressure on Tehran.
Oil Markets Find Stability
Crude oil prices stabilised in early Thursday trading following substantial volatility since the Iran conflict began in late February. Brent crude, the international benchmark, edged up less than 0.1% to $94.94 per barrel, while U.S. benchmark crude rose 0.4% to $91.66 per barrel.
The Strait of Hormuz, a critical maritime passage typically handling approximately one-fifth of global oil shipments, has remained largely closed during the conflict. The United States recently imposed a naval blockade on Iranian ports to compel Tehran to reopen the strait and accept a negotiated settlement.
ING Bank strategists Warren Patterson and Ewa Manthey cautioned in a research note that "the key upside risk for the market is that peace talks between the US and Iran break down," noting that "this isn't an unrealistic scenario, given that US and Iranian demands remain fairly wide apart."
Wall Street Sets New Record High
The positive momentum in Asian markets followed a record-breaking session on Wall Street, where investor optimism about progress toward a longer-term ceasefire in Iran drove major indexes higher. The benchmark S&P 500 rose 0.8% to 7,022.95, surpassing its previous all-time high established in January.
The technology-heavy Nasdaq composite gained 1.6% to reach 24,016.02, although the Dow Jones Industrial Average experienced a slight decline of 0.2% to 48,463.72.
Corporate Earnings Boost Financial Sector
Bank of America shares advanced by 1.8% after the institution reported better-than-expected quarterly results. Chief Executive Brian Moynihan pointed to signs of a "resilient American economy," highlighting robust consumer spending patterns. Similarly, Morgan Stanley shares surged 4.5% following the release of strong quarterly earnings that exceeded analyst expectations.
In a remarkable market move, San Francisco-based footwear company Allbirds witnessed its share price skyrocket by 582% to nearly $17 after announcing a strategic pivot toward artificial intelligence and plans to rebrand as NewBird AI.
Precious Metals and Currency Movements
Precious metals also experienced gains during Thursday's trading session. Gold prices climbed 0.5% to $4,846.40 per ounce, while silver prices increased by 1.3% to $80.62 per ounce.
In currency markets, the U.S. dollar weakened against the Japanese yen, falling to 158.58 yen from 159 yen. The euro strengthened slightly against the dollar, trading at $1.1814 compared to $1.1799 previously.
The collective market movements reflect growing investor confidence in diplomatic resolutions to geopolitical tensions, combined with optimism about corporate performance and economic resilience in key global markets.
