The MSCI Asia Pacific Index opened 0.4% higher on Thursday as traders bet a de-escalation of the Middle East conflict will ease oil prices and lift economic growth. That was after the S&P 500 and Nasdaq 100 indexes both closed at record highs, with Bank of America Corp. and Morgan Stanley leading financials higher after stronger-than-expected revenue.
As Middle East tensions cooled, the dollar — which emerged as the haven of choice during the conflict — was a touch weaker on Thursday, with the Bloomberg Dollar Spot Index set for its longest losing streak since December 2006. Brent crude traded just under $95 a barrel. Gold edged up to hover around $4,830 an ounce, while Treasuries were slightly stronger.
The US and Iran are considering a two-week ceasefire extension to allow more time to negotiate a peace deal, according to a person familiar with the matter, reducing the risk of a resumption of fighting despite an intensifying standoff over the Strait of Hormuz.
The rally in global stocks marks a sharp reversal from last month’s selloff, which pushed the Nasdaq 100 into a technical correction, with investors returning to equities despite lingering uncertainty over the war’s trajectory. Easing Middle East tensions, along with enthusiasm for artificial intelligence and resilient earnings, have led many skeptics to dial back their caution.“While we believe it is prudent to maintain a healthy sense of skepticism regarding this headline-driven optimism, underlying breadth and trend indicators are improving off March lows, or at least until the next headline proves otherwise,” said Craig Johnson at Piper Sandler.Optimism that US-Iran peace efforts will gain traction is prompting investors to unwind the risk premium that has built up since the conflict began in late February.Technology stocks, which have lagged for much of the year, led gains on Wall Street. Oracle Corp. soared 4.2% and Microsoft Corp. rose 4.6%.
