Global Stocks Hit Record on Iran Ceasefire Bets: Markets Wrap

(Bloomberg) — Global equities climbed to all-time highs on signs the US and Iran may extend a ceasefire, helping markets unwind war-driven risk premiums.

The MSCI All Country World Index — a broad measure of global shares — rose as much as 0.3% to a record, heading for a 10th day of gains, after robust US corporate earnings also boosted sentiment. That’s the longest winning streak since September. Asian shares advanced 1.2%, nearly erasing their war-triggered losses, with the Nikkei closing at an all-time high.

Asian stocks rallied after Wall Street gauges also closed at record highs, with traders betting a de-escalation of the Middle East conflict will push down oil prices and boost economic growth. Equity-index futures indicated the gains would extend in Europe.

Helping sentiment, global crude benchmark Brent held around $95 a barrel, well below last month’s peak of nearly $120. The dollar was little changed.

The MSCI All Country index, which had dropped as much as 9% from the start of the war through to its low on March 30, erased all those declines on expectations the US and Iran will eventually reach a peace deal. Renewed enthusiasm for technology stocks has also helped drive the reversal from last month’s selloff, which pushed several gauges into technical correction.

“The sight of oil trading at sub-$100 levels and hopes of a diplomatic breakthrough are combining to breathe life back into equities,” said Tim Waterer, chief market analyst at KCM Trade.

The US and Iran are considering extending their ceasefire that ends on Tuesday by another two weeks to allow more time to negotiate a peace agreement, according to a person familiar with the matter. President Donald Trump also said leaders of Israel and Lebanon will be speaking.

What Bloomberg Strategists Say…

“The major equity indexes across Asia are enjoying another buoyant session with investors switching focus back to the earnings power of major companies, as the war in Iran moves into the background. Moreover, the friction between short-term inflation pressures and medium-term economic growth risks is keeping bond yield curves in a holding pattern, which is another positive input into stocks.”

— Mark Cranfield, MLIV. For full analysis, click here.

Elsewhere, gold rose 0.6% to about $4,820 an ounce, while silver jumped 1.8%. Treasuries advanced, with the benchmark 10-year yield falling two basis points to 4.27% as lower oil prices eased concern about quicker inflation.

“There is pretty much no risk premium priced into financial markets outside of some at the front end of rates,” said Andrew Chorlton, chief investment officer for fixed income at M&G Investments. “Inflation expectations past a year or two — there’s no risk priced now.”

The prospect of renewed negotiations has helped sustain a broader risk-on tone across markets. Emerging-market stocks extended gains with the MSCI Emerging Markets Index climbing 1.2% on Thursday.

Benchmarks in Singapore and Taiwan, China’s CSI 300 Index as well as the MSCI Latin America Index, have all reversed losses that came after the US and Israel attacked Iran. Also, Taiwan overtook the UK in stock market value as the island’s tech firms regained favor.

History of geopolitical crises shows that crises “turn out to be great buying opportunities,” said Ed Yardeni or Yardeni Research. “That’s the situation we are in right now.”

Corporate News:

Pernod Ricard SA expects the war in the Middle East to drive sales down as much as 4% for the year as it continues to struggle with weak demand in the US and China. Taiwan Semiconductor Manufacturing Co. booked a 58% surge in profit, a sign that the Middle East war in its first few weeks did not depress booming AI investment. The Trump administration wants automakers and other American manufacturers to play a larger role in weapons production. Senior defense officials have held talks about producing weapons and other military supplies with the top executives of companies including General Motors and Ford, the Wall Street Journal reported. Four of the six largest US banks reduced their headcount during the first three months of the year, with Wells Fargo & Co. leading the way with more than 4,000 cuts, while JPMorgan Chase & Co. and Morgan Stanley added staff. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 7:32 a.m. London time Nasdaq 100 futures rose 0.4% Futures on the Dow Jones Industrial Average rose 0.1% The MSCI Asia Pacific Index rose 1.2% The MSCI Emerging Markets Index rose 1.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1795 The Japanese yen was little changed at 158.93 per dollar The offshore yuan was little changed at 6.8167 per dollar The British pound was little changed at $1.3566 Cryptocurrencies

Bitcoin rose 0.2% to $75,030.21 Ether fell 0.3% to $2,355.68 Bonds

The yield on 10-year Treasuries declined two basis points to 4.27% Germany’s 10-year yield declined two basis points to 3.02% Britain’s 10-year yield advanced three basis points to 4.81% Commodities

Brent crude was little changed Spot gold rose 0.6% to $4,819.41 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Abhishek Vishnoi and Ruth Carson.

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