Global equity markets largely advanced on Thursday, with Wall Street’s benchmark S&P 500 achieving an all-time high, as investors closely monitored developments surrounding a potential ceasefire extension in the Iran war and ongoing diplomatic efforts between the United States and Iran. This cautious optimism also saw oil prices firm, reflecting the delicate balance between geopolitical tensions and hopes for de-escalation in a conflict that has significantly impacted global energy supplies.
Global Market Performance Overview
European bourses registered gains in early trading. Britain’s FTSE 100 climbed 0.5% to 10,610.04, while France’s CAC 40 also rose 0.5% to 8,316.76. Germany’s DAX saw a similar increase, gaining 0.5% to 24,175.91. Across Asia, markets mostly closed higher. Tokyo’s Nikkei 225 surged 2.4% to an all-time high of 59,518.34, marking a significant recovery from losses incurred since the onset of the Iran war. South Korea’s Kospi advanced 2.2% to 6,226.05, and Hong Kong’s Hang Seng increased 1.7% to 26,394.26. The Shanghai Composite index also posted a 0.7% gain, closing at 4,055.55. Taiwan’s Taiex traded 1.1% higher, though Australia’s S&P/ASX 200 bucked the trend, losing 0.3%.
China’s Economic Snapshot and Corporate Highlights
China reported a robust 5% economic growth for the January-March quarter, an acceleration from the previous quarter, signaling resilience. While economists suggest China has largely absorbed the initial shocks of the Iran war, warnings persist that its substantial export engine could face more significant headwinds in the coming months due to anticipated slower global economic growth. In corporate news, shares of chipmaker TSMC were up 0.2% ahead of its results announcement, which later revealed a 58% jump in profit, surpassing analyst expectations.
Oil Market Dynamics and Geopolitical Tensions
The oil market saw gains on Thursday, with Brent crude, the international standard, rising 1.4% to $96.27 per barrel. Benchmark U.S. crude similarly increased by 1.2% to $92.41 a barrel. These movements come as the Iran war, which began in late February, continues to disrupt global energy flows. The Strait of Hormuz, a vital waterway through which approximately a fifth of the world’s oil normally passes, has remained largely closed. The U.S. has intensified pressure, imposing a sea blockade on Iranian ports this week to compel Tehran to reopen the strait and agree to a deal. The geopolitical backdrop remains fraught, despite reports from regional officials to The Associated Press of an “in-principle agreement” to extend a two-week ceasefire deal expiring next week, and progress towards another round of talks between the U.S. and Iran. However, U.S. Treasury Secretary Scott Bessent issued a stern warning, stating Washington is preparing to apply secondary sanctions on entities conducting business with Iran, potentially including Chinese firms purchasing Iranian oil, to escalate economic pressure. ING Bank strategists Warren Patterson and Ewa Manthey cautioned in a note, “The key upside risk for the market is that peace talks between the US and Iran break down,” adding, “This isn’t an unrealistic scenario, given that US and Iranian demands remain fairly wide apart.”
Wall Street’s Record Run and Corporate Earnings
On Wednesday, Wall Street demonstrated strong performance, driven by optimism regarding progress towards a longer-term ceasefire in the Iran war. The benchmark S&P 500 rose 0.8% to 7,022.95, surpassing its previous all-time high set in January. The Nasdaq composite also gained significantly, up 1.6% to 24,016.02, while the Dow Jones Industrial Average edged down 0.2% to 48,463.72. Corporate earnings provided additional impetus. Shares of Bank of America climbed 1.8% following better-than-expected quarterly results, with CEO Brian Moynihan noting signs of a “resilient American economy” and solid consumer spending. Morgan Stanley also saw its shares gain 4.5% after reporting stronger-than-expected quarterly figures. In a notable individual stock movement, San Francisco-based shoe brand Allbirds’ share price surged 582% to nearly $17 after announcing a strategic pivot into artificial intelligence and a rebranding to NewBird AI.
Other Market Movements
Beyond equities and oil, other commodities also saw minor shifts. The price of gold climbed 0.1% on Thursday to $4,829.40 an ounce, while silver prices edged up less than 0.1% to $79.65 per ounce. In currency markets, the U.S. dollar strengthened against the Japanese yen, rising to 159.12 yen from 159 yen. Conversely, the euro traded slightly lower at $1.1774, down from $1.1799.
The global market’s current trajectory reflects a complex interplay of geopolitical hopes and economic realities. While a potential de-escalation in the Iran war and robust corporate earnings have fueled investor confidence and propelled key indices to record highs, the underlying tensions, particularly concerning the Strait of Hormuz and the U.S. sanctions policy, remain critical factors that could swiftly alter market sentiment.
