Global equities rally on Iran peace optimism and AI hype
U.S. stocks rose on Wednesday after oil prices dropped, spurred by President Donald Trump's comment that significant steps had been taken toward a peace agreement with Tehran. He also announced a brief pause in the so‑called Project Freedom, which escorts vessels through the Strait of Hormuz, a chokepoint that handles roughly 20% of global oil and LNG and has been blockaded by Iran since late February. Brent crude fell 3.2% to $106.40 a barrel, easing the energy squeeze that has weighed on markets.
European markets followed the trend, with the STOXX 600 gaining 1.5% in morning trade after a 0.7% rise the previous day. MSCI's All‑Country World Index climbed 0.7% to a new record, while S&P 500 futures edged up 0.3% after the index had risen 0.8% to hit another historic high, driven by robust earnings and AI enthusiasm. Chris Turner, head of global markets at ING, noted that investors remain eager to deploy capital on positive Gulf news, but warned that a lasting peace deal is still uncertain and oil volatility is likely to persist.
In Asia, the broadest index of Pacific shares outside Japan jumped 2.9%, led by a 6.5% surge in South Korea's KOSPI after the market reopened from a holiday. Samsung Electronics surged 14%, briefly surpassing a $1 trillion market cap and overtaking Berkshire Hathaway. Rushil Khanna of Ostrum highlighted that U.S. AI hyperscaler capex is boosting earnings outlooks for Asian semiconductors, tech hardware, industrials and materials more than seen in years. In the United States, Advanced Micro Devices rallied 16% in after‑hours trading after forecasting second‑quarter revenue above Wall Street expectations, fueling AI‑driven optimism across markets.
The yen strengthened sharply, gaining up to 1.8% to 155 per dollar as traders watched for possible intervention by Japanese authorities. Thomas Mathews of Capital Economics suggested that optimism over a U.S.–Iran deal may have prompted a nudge to the currency, though he cautioned that holiday‑light trading could be influencing the move. Meanwhile, the U.S. dollar slipped 0.3% against major peers, reflecting hopes of a settlement, and Treasury yields fell as oil prices retreated. The 10‑year U.S. Treasury yield dropped five basis points to 4.37%, indicating reduced pressure on borrowing costs worldwide.
