Global stock markets have reached record highs after a tumultuous six-week period, as investors refocus on market fundamentals amid easing geopolitical tensions. MSCI’s all-country index clocked a new high on Thursday, with Japan’s Nikkei hitting a fresh record after closing up 2.5%, and South Korea’s KOSPI rising by more than 2%. This rally follows renewed optimism surrounding potential U.S.-Iran peace talks, with a Pakistani mediator arriving in Tehran and the Trump administration signalling hopes for a deal. Possible negotiations between Israel and Lebanon also contributed to the positive sentiment.
Corporate earnings have provided a significant boost, with major U.S. banks such as Bank of America and Morgan Stanley impressing investors with their first-quarter results earlier this week. Taiwan Semiconductor Manufacturing Company (TSMC), a pivotal global player in the technology sector specialising in semiconductor manufacturing, also comfortably beat expectations. Overall, more than 80% of companies that have reported for the quarter so far have surpassed analysts’ forecasts, propelling major U.S. indexes to new highs on Wednesday.
Commodity markets reflected the cheerier outlook, with oil prices staying below the important US$100-per-barrel level, despite both Brent and WTI crude rising over 1% on Thursday to trade around US$96/bbl and US$92/bbl respectively. The U.S. dollar, however, lingered near six-week lows, extending losses for an eighth straight session and unwinding most of its safe-haven gains accumulated since the Iran conflict began. Meanwhile, China reported a robust first-quarter GDP growth of 5.0%, surpassing economists’ forecasts of 4.8%, highlighting its economic resilience despite a slowdown in retail sales growth and industrial output in March.
Domestically, U.S. President Trump renewed his criticism of outgoing Federal Reserve Chair Jerome Powell, threatening his removal from the Fed board after his term as chair concludes next month. Congressional hearings for Fed Chair nominee Kevin Warsh are scheduled to commence next week, providing further clarity on future monetary policy direction.
