Oil prices experienced a sharp decline, approaching the $100 mark, as optimism surrounding a potential US-Iran agreement to reopen the Strait of Hormuz intensified. However, the positive sentiment was tempered by ongoing military tensions in the critical waterway.
Oil Market Movements
Brent crude dropped 7.8 per cent to $101.27 a barrel on Wednesday, a significant fall from over $115 earlier in the week. This came after US President Donald Trump indicated that the strait could be 'open to all' if Iran accepted a reported agreement, though he did not disclose specific details. According to Axios, citing four sources, the US believed it was close to a one-page memorandum of understanding aimed at ending hostilities. The proposed deal would declare an end to the conflict and initiate a 30-day negotiation period covering the reopening of the strait, limitations on Iran's nuclear programme, and the lifting of US sanctions.
An Iranian foreign ministry spokesperson confirmed that the US proposal was still under consideration. Brent briefly fell below $97 before rebounding above $100 after Trump threatened to resume bombing 'at a much higher level and intensity' if Iran rejected the agreement. By Thursday morning, Brent had edged up 51 cents to $101.78, while US benchmark crude gained 55 cents to $95.63.
Stock Market Surge
Wall Street recorded its best day in nearly a month on Wednesday. The S&P 500 climbed 1.5 per cent to a fresh record of 7,365, the Dow Jones Industrial Average jumped 1.2 per cent to 49,910, and the Nasdaq rose 2 per cent to 25,838. These gains extended into Asian markets on Thursday, with Tokyo's Nikkei surging 5.7 per cent to an intraday record of 62,915 as markets reopened after the Golden Week holiday. The Nikkei has gained approximately 18 per cent over the past three months and nearly 73 per cent over the past year, driven by strong buying in tech stocks benefiting from the AI boom.
Elsewhere in Asia, Taiwan's Taiex surged 2.1 per cent, the Hang Seng in Hong Kong gained 1.3 per cent, and Australia's S&P/ASX 200 rose 0.9 per cent. South Korea's Kospi slipped 0.4 per cent as traders locked in profits following a nearly 7 per cent jump the previous day, which pushed the index above 7,000 for the first time.
Tech and Corporate Earnings
The AI trade continued to drive market gains. AMD surged 18.6 per cent after exceeding expectations for both profit and revenue, with CEO Lisa Su citing sustained growth in AI technology driving data centre demand. Super Micro Computer rallied 24.5 per cent on stronger-than-expected earnings, while Nvidia rose 5.7 per cent, making it the largest single contributor to the S&P 500's advance due to its enormous market weighting. CVS Health climbed 7.6 per cent and Disney gained 7.5 per cent after both raised their full-year forecasts.
Companies with substantial fuel costs also rallied on hopes that oil prices would continue to ease. United Airlines and Carnival each gained 6.8 per cent, while Royal Caribbean rose 8.8 per cent.
Geopolitical Tensions
Despite the market optimism, ongoing military activity in the Strait of Hormuz tempered sentiment. The US military reported that a fighter jet shot out the rudder of an Iranian oil tanker in the Gulf of Oman on Wednesday after the vessel attempted to breach the American blockade of Iran's ports. Secretary of State Marco Rubio told reporters that the initial US-Israeli offensive in Iran was over, adding that Washington would prefer a diplomatic deal. Iran has not yet responded. Parliamentary speaker Mohammad Ghalibaf stated: 'We know well that the continuation of the status quo is intolerable for America, while we are just getting started.'
Currency Markets
In currency trading, the dollar fell to 156.32 yen from 156.40, while the euro rose to $1.1756 from $1.1747.
