Stocks in Asia looked set to extend their recent gains on Thursday, tracking Wall Street higher as optimism around a potential US-Iran ceasefire and robust corporate earnings buoyed sentiment.
Equity-index futures for Japan and Hong Kong pointed to advances at the open, while those for Australia were little changed. That was after the S&P 500 and Nasdaq 100 indexes both closed at record highs. Bank of America Corp. and Morgan Stanley led financials higher on Wall Street following stronger-than-expected revenue. US futures were little changed early Thursday.
Elsewhere, oil crept lower at the start of Asian trade, while Treasury futures were little changed. Gold edged higher after dropping more than 1% on Wednesday.
The US and Iran are considering a two-week ceasefire extension to allow more time to negotiate a peace deal, according to a person familiar with the matter, reducing the risk of a resumption of fighting despite an intensifying standoff over the Strait of Hormuz.
The rally in global stocks marks a sharp turnaround from last month's selloff, which pushed the Nasdaq 100 into a technical correction. Investors have since piled back into equities despite lingering uncertainty over the war's trajectory. Easing tensions in the Middle East, alongside enthusiasm for artificial intelligence and resilient earnings, have prompted many skeptics to dial back their caution.
"While we believe it is prudent to maintain a healthy sense of skepticism regarding this headline-driven optimism, underlying breadth and trend indicators are improving off March lows, or at least until the next headline proves otherwise," said Craig Johnson at Piper Sandler.
Optimism that US-Iran peace efforts will gain traction are prompting investors to unwind the risk premium that has built up since the conflict began in late February.
Technology stocks, which have lagged for much of the year, led gains on Wall Street. Oracle Corp. soared 4.2% and Microsoft Corp. rose 4.6%.
"It looked like a rotation day today within the tech sector as investors sold the high flying chip stocks and bought the beaten down software names," said Matt Maley of Miller Tabak. "That said, after such a big run, we could see a near-term breather in the tech sector but that would be normal and healthy."
The prospect of renewed negotiations helped sustain a broader risk-on tone across markets. Emerging-market stocks extended gains with the MSCI Emerging Markets Index climbing 1.2%, taking its two-day advance to more than 3% as it continues to recover losses triggered by the conflict. The rebound has lifted its year-to-date gains to nearly 13%.
Benchmarks in Singapore and Taiwan, as well as the MSCI Latin America Index, have all reversed losses that came after the US and Israel attacked Iran.
"North Asia, EM Europe and Latin America have led the relief rally, while oil-importing parts of ASEAN and India have lagged," Goldman Sachs analysts including Kamakshya Trivedi wrote in a report. "We expect this differentiation to persist given ongoing physical disruptions."
Corporate News:
- Jane Street Group has taken an additional $1 billion stake in AI cloud services provider CoreWeave Inc. and plans to spend about $6 billion on the company's technology offerings.
- Morgan Stanley's stock traders joined the rest of Wall Street with a record-breaking first quarter.
- Bank of America Corp.'s traders pulled in the business's highest quarterly revenue in more than a decade, riding a wave of volatility that pushed the firm's stock-trading desk to an all-time record.
- Allbirds Inc., the once-buzzy maker of wool sneakers valued at more than $4 billion in its heyday, announced a new business plan just days before it planned to close down for good: AI computing infrastructure.
- Four of the six largest US banks reduced their headcount during the first three months of the year, with Wells Fargo & Co. leading the way with more than 4,000 cuts, while JPMorgan Chase & Co. and Morgan Stanley added staff.
Some of the main moves in markets:
Stocks
- S&P 500 futures were unchanged as of 7:06 a.m. Tokyo time
- Hang Seng futures rose 0.6%
- S&P/ASX 200 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1802
- The Japanese yen was little changed at 158.89 per dollar
- The offshore yuan was little changed at 6.8176 per dollar
Cryptocurrencies
- Bitcoin rose 0.1% to $74,960.01
- Ether rose 0.3% to $2,370.24
Commodities
- West Texas Intermediate crude fell 0.3% to $91.04 a barrel
- Spot gold rose 0.2% to $4,798.33 an ounce
This story was produced with the assistance of Bloomberg Automation.