Stocks surged and oil prices dropped yesterday after a report that the United States and Iran are closing in on an agreement to end the war in the Gulf, while momentum in AI-driven trades accelerated.
Brent crude, the global benchmark, plunged to just below $100 per barrel, its lowest in two weeks, given the importance of oil passing through the Strait of Hormuz.
Brent was last trading at $102.1, down 7 per cent on the day.
On Wall Street, a humming US corporate profit engine continued to rally US stocks to record highs.
The Dow Jones Industrial Average added 1.1pc, the S&P 500 rose 1.2pc, and the Nasdaq Composite jumped 1.6pc.
Europe’s STOXX 600 index extended its gains and was last up 2.2pc after climbing 0.7pc a day earlier.
MSCI’s All-Country World Index climbed 1.64pc to a fresh record.
“A pretty punchy move on the back of those stories, almost as if the market has shifted into ‘buy everything’ mode,” said Michael Brown, senior research strategist at Pepperstone.
“It’s difficult to say how close to a deal we might be,” he said.
“Market participants, though, aren’t going to wait for confirmation of good news and are essentially now front-running a positive outcome.”
The US dollar, which has been a safe haven during the Iran war, dropped 0.3pc against its major peers, reflecting investor hopes for a possible deal.
The yen rose by as much as 1.8pc against the dollar in a swift move, triggering speculation of another round of intervention.
Meanwhile, yields on government bonds fell along with oil prices as traders dialled down their bets on central bank rate hikes.
The 10-year US Treasury yield fell 6.2 basis points to 4.354pc.
Although stocks have rallied sharply, ructions in energy and bond markets could weigh on global growth.
Oil prices are around 35pc higher than they were when the conflict began in late February, while 10-year Treasury yields are around 40 bps higher.
In the US, shares in chipmaker Advanced Micro Devices jumped around 15pc as the company forecast second-quarter revenue above Wall Street expectations, helping drive AI enthusiasm across markets. Rival Intel also rose to a record high, while chip designer Arm Holdings and chipmaker Qualcomm also surged.
The broadest index of Asia-Pacific shares outside Japan jumped 3.2pc.
Samsung Electronics surged 14pc, topping a $1 trillion market value and overtaking Berkshire Hathaway.
“Due to the capex spend we are seeing from (AI) hyperscalers in the US, the earnings growth trajectory for sectors such as semiconductors, tech hardware, industrials and materials in Asia exceeds anything I have seen in a long time,” said Rushil Khanna, head of equity investments for Asia at Ostrum, an affiliate of Natixis Investment Managers.
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