Stocks climbed to a record after US President Donald Trump signaled progress toward a final agreement with Iran, adding fresh momentum to markets already buoyed by a rally in technology shares. Crude oil declined.
MSCI’s gauge for Asian equities advanced 1.8 percent to an all-time high with technology shares leading gains on renewed optimism for the artificial intelligence trade.
The Kospi index in South Korea, a poster child for AI investments, jumped more than 6 percent to a record, with Samsung Electronics Co surging 15 percent to reach a valuation of $1 trillion, the second Asian company to attain that mark.
Brent fell 1.7 percent to about $108 a barrel on speculation tensions in the Middle East will ease following Trump’s comments. Meanwhile the yen surged 1 percent against the dollar. The US currency also weakened against all its Group-of-10 peers.
MSCI’s index of global stocks also advanced to a record as cheaper oil bolstered expectations for easing inflation and stronger growth. Wall Street gauges also closed at all-time highs on Tuesday.
Stronger-than-expected earnings from Advanced Micro Devices Inc and Super Micro Computer Inc after the US close added to risk appetite, with futures for the Nasdaq 100 Index rising 0.6 percent.
With geopolitical risk premiums easing, the prospect of lower energy costs and reduced uncertainty improved the outlook for global growth, reinforcing support for equities even at record levels. The backdrop also dovetailed with a revival in the AI trade, as easing inflation pressures and improved sentiment bolstered expectations for stronger corporate earnings.
“Rising semiconductor content across AI and high-performance computing is a structural multi-year growth driver,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “So any signs of easing tensions in the Middle East will bring investors back into the trade, especially for supply chain players residing in Asia and emerging markets.”
Trump said he would pause a US-led effort to help stranded ships exit the Strait of Hormuz to see if an agreement with Iran to end the war could be reached. The president cited “Great Progress” toward a complete and final agreement with Iran.
However, he added that a US blockade of ships transiting to and from Iranian ports would “remain in full force and effect.”
It was not clear what progress Trump referred to, and he didn’t provide details on what, if any, negotiations were in the works. His comments marked an abrupt shift from recent days when he had voiced frustration over the pace of talks and indicated he wasn’t satisfied with Tehran’s proposals.
“The market is pricing in optimism, the physical reality is lagging,” said Dilin Wu, a strategist at Pepperstone Group. “Oil prices may be pulling back on headline relief, but you’re still seeing limited shipments through the Strait of Hormuz. It will take time for stranded tankers to be rerouted, for the insurance market to reprice risk, and for production to ramp back up.”
Elsewhere, China’s benchmark CSI 300 Index rose 1.5 percent as trading resumed after local holidays.
Meanwhile, cheaper oil lifted the debt market with US long bonds rebounding during the New York session. That sent the 30-year yield back below 5 percent. Even so, bond traders are boosting wagers that the Federal Reserve’s next policy move may be an interest-rate hike rather than a cut.
There will be no cash trading in Treasuries during the Asian day due to a holiday in Japan. Treasury futures gained.
In other corners of the market, gold rose 1.9 percent to about $4,640 an ounce and Bitcoin was a touch weaker at about $81,500.
The rebound in global equities from their Iran war lows has been notably narrow, according to JPMorgan Chase & Co strategists led by Mislav Matejka. That leaves markets primed for broader gains on even modestly positive news, they said.
“This combination of robust earnings and clear corporate conviction in the AI theme has given investors the confidence to largely look through the geopolitical headlines,” said chief market analyst at KCM Trade.
