Stocks rise as optimism over Mideast war takes hold

Markets climb as ceasefire hopes lift global sentiment. [File Courtesy]

Stock markets advanced Thursday on expectations that a Mideast ceasefire would soon let oil and gas tankers resume transit through the Strait of Hormuz, easing inflation pressures that have upended economies worldwide.

Signs of fresh talks aimed at ending the war launched by the US and Israel against Iran have pushed stock indexes to all-time highs, suggesting investors expect a quick economic rebound from the conflict.

The Tokyo stock market reached a record high on Thursday, following all-time peaks for key US indexes on Wednesday as investors cheered healthy earnings for US blue chips despite surging oil prices and rising inflation overall.

Global stock markets “have staged one of the fastest recoveries in recent memory”, said Matt Britzman, senior equity analyst at Hargreaves Lansdown. 

At the same time, “oil prices remain elevated... as investors look towards a possible extension of the ceasefire between the US and Iran while weighing the chances of a broader agreement that could ultimately reopen the Strait of Hormuz”, he said.

The waterway, through which one-fifth of oil and gas usually passes, has been choked by Iranian forces since the US-Israeli offensive began.  

In the eurozone, inflation leapt to 2.6 per cent in March on surging energy prices, official data showed Thursday.

Yet even as the global economy reels from the fallout of war in the Middle East, China’s economic growth topped expectations in the first quarter of the year, official figures showed.

Gross domestic product in the world’s second-largest economy expanded 5.0 per cent in the quarter from a year earlier.

“Hope has given way to a bright, beaming light at the end of the peace tunnel,” said Stephen Innes at SPI Asset Management.

“The market is no longer asking whether there will be a deal. It is trading as if the deal is already signed, sealed, and quietly filed away.”

The Tokyo and Seoul stock markets led a rally in Asia, as traders poured back into the AI-based tech investments that helped send global stock markets surging before the Middle East war started on February 28.

In a sign of the still-strong demand for artificial intelligence, Taiwanese chip manufacturer TSMC reported a record first-quarter profit of $18 billion, far outpacing estimates.