🤯AI Rally! Stocks Soar, Oil Plummets 📉

MIDDLE EAST PEACE DEAL SPARKING GLOBAL MARKET REBOUND
The global financial markets experienced a significant shift on Thursday, driven primarily by the prospect of a peace agreement in the Middle East. Asian stocks surged to record highs, the U.S. dollar weakened, and oil prices plunged as traders reacted positively to the developing situation. This rally was fueled by the belief that a resolution, however tentative, would represent a major breakthrough, with analysts like Kyle Rodda at Capital.com noting the justified nature of the market’s reaction. However, the potential for a rapid reversal of gains highlighted the volatility inherent in the situation, emphasizing the need for cautious optimism.

IRAN’S REVIEW OF THE PEACE PROPOSAL
Iran announced its intention to review a peace proposal, a move that followed reports suggesting the deal would formally end the conflict while leaving unresolved key U.S. demands, particularly regarding Iran’s nuclear program and the reopening of the Strait of Hormuz. The closure of the Strait of Hormuz had previously triggered a surge in oil prices, demonstrating the critical vulnerability of global energy markets to this geopolitical tension. The potential for a deal, which began at the end of February, sent oil prices sliding on Wednesday, illustrating the market’s sensitivity to developments in the region.

OIL PRICE VOLATILITY AND GLOBAL ECONOMIC IMPLICATIONS
Despite the prospect of a deal, oil prices remained elevated, approximately 40% higher than their levels at the conflict's outset. This sustained high price environment presented a significant challenge to the global economy, exacerbated by rising 10-year Treasury yields. OCBC analysts cautioned that even with the potential reopening of the Strait of Hormuz within weeks, oil prices were likely to remain elevated due to damage to energy infrastructure and precautionary stockpiling. The situation underscored the broader economic headwinds created by high energy prices and ongoing supply chain disruptions, raising concerns about sustained inflation.

CURRENCY MARKETS REACT TO RISK SENTIMENT
Currency markets reflected the shifting risk sentiment, with the euro and sterling experiencing gains against the dollar. The euro rose by approximately 0.5% overnight, trading at $1.1747, while sterling climbed 0.4% to $1.3591. The dollar index, which measures the U.S. currency against six units, remained at 98.032. However, the Japanese yen (USD/JPY) remained a focal point of attention, experiencing a significant surge in the previous session, prompting speculation about potential intervention by the Ministry of Finance. The yen last traded at 156.29 per dollar, little changed on the day, with analysts debating the Ministry’s likely actions, contingent on factors like BOJ policy and external drivers such as lower oil prices.

TECHNOLOGY EARNINGS FUEL U.S. MARKET REBOUND
Onshore, the U.S. market continued its upward trajectory, fueled by robust earnings reports from technology companies. The S&P 500 SPX and Nasdaq IXIC both reached record-high closes overnight, reflecting the sector’s strong performance. S&P 500 companies are poised for their strongest profit growth in over four years, driven by the sector’s resilience. Investors are keenly awaiting the upcoming non-farm payrolls report on Friday, anticipating job gains of 62,000 in April following a rebound of 178,000 in March, according to a Reuters survey of economists.