Global Markets Rally for Ninth Straight Day on Iran Peace Hopes
Global equity markets continued their upward momentum for a ninth consecutive day on Wednesday, buoyed by hopes of renewed diplomatic engagement between the United States and Iran. President Donald Trump's announcement that talks could resume within days helped lift sentiment across financial markets.
The MSCI All-Country World Index gained 0.1%, approaching its all-time high and extending its winning streak. European markets opened flat, with French stocks declining 0.3%. Corporate earnings remained a focal point for investors.
Analysts at Deutsche Bank noted in a research memo that the prospect of continued diplomatic dialogue in the Middle East had helped calm investor nerves. They observed that market participants continued to view the conflict as likely temporary, easing concerns about stagflationary risks.
Asian markets outside Japan rose 1.5%, reaching six-week highs. Japan's Nikkei advanced 0.9% while South Korea's KOSPI jumped 3%. On Tuesday, the Nasdaq posted a 2% gain for its tenth consecutive day of advances, with the S&P 500 nearing record closing levels.
U.S. producer price data provided additional support, showing March inflation rose less than economists had forecast. This tempered concerns about conflict-driven price pressures.
Wall Street futures traded flat, suggesting the rally might lose steam. Brent crude futures rebounded 1% to $95.77 per barrel after a nearly 5% overnight decline.
The U.S. dollar weakened, trading near six-week lows and surrendering most gains made since the Middle East conflict began on February 28. The dollar index stood at 98.109.
"The dollar's failure to advance as much as expected since the conflict began, combined with emerging signs of increased selling appetite, indicates a weak fundamental backdrop," noted MUFG analyst Derek Halpenny.
In currency markets, the euro traded at $1.1786 after hitting a six-week high of $1.1811. Sterling was at $1.3560. China's onshore yuan weakened slightly to 6.8178 per dollar following data showing a sharp slowdown in March exports, as the Iran conflict drove up energy costs and dampened global demand.
Analysts maintained that the Chinese currency's long-term appreciation trend remained intact, with hopes building for a diplomatic resolution that would reduce the dollar's safe-haven appeal.
Investor optimism about a swift end to hostilities also supported U.S. Treasuries, which had recently faced selling pressure due to inflation concerns. The two-year Treasury yield rose slightly to 3.7593%, while the 10-year yield held steady at 4.2578% after dropping 4 basis points overnight.
With oil flows still effectively blocked through the Strait of Hormuz, the International Monetary Fund lowered its growth outlook Tuesday and warned that the global economy would teeter on the brink of recession if the conflict worsens.
