Stocks trade around record highs, oil falls on peace optimism

Stocks rose on Thursday while oil prices sank on optimism over a U.S.-Iran peace deal, even as the fate of the critical Strait of Hormuz appeared unresolved.

MSCI's All-Country World Index rose 0.23 per cent to approach record highs. Europe's STOXX 600 was little changed, having jumped 2.2 per cent on Wednesday, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.82 per cent to a fresh all-time high.

Japan's Nikkei crossed 62,000 for the first time as trading resumed after an extended holiday weekend.

While the Middle East situation was uncertain, "the momentum is going in a good direction" and markets had taken note of it, Lombard Odier chief economist Samy Chaar said.

"So the oil price is down from its highs, which is obviously relieving pressure on yield curves and bond yields, and that is great news for equity valuation and makes currencies move a ⁠bit," he said.

A strong earnings season and relatively robust macroeconomic environment added to a positive market mood, Chaar added.

US President Donald Trump predicted a swift end to the war with Iran as Tehran considered a US peace proposal that sources said would formally end the conflict while leaving unresolved key US demands that Iran suspend its nuclear programme and reopen the Strait of Hormuz.

Brent crude fell 1.5 per cent to $99.82 a barrel, having tumbled nearly 8 per cent on Wednesday.

Even after that slide, Brent is still 40 per cent above its late-February level, when the conflict began, while 10-year Treasury yields have surged — a reminder of the strain higher energy costs continue to put on the global economy.

On the day, 10-year Treasury yields were last down by 2 basis points to 4.334 per cent.

Nick Twidale, chief market strategist at ATFX Global, said the market was wrestling with execution risk, "both in terms of whether a deal is finalised and how quickly disrupted flows would normalise ⁠even if it is."

Rocketing oil prices whacked global markets in March but a fragile ceasefire and prospect of a deal have spurred a risk-on rally since April that has been fuelled by strong tech earnings reports.

S&P 500 companies are on track for their strongest profit growth in more than four years, while blowout results from Samsung, SK Hynix and TSMC have reinforced the upbeat tone in Asia.

Investors await the U.S. non-farm payrolls report on Friday, with jobs expected to have increased in April by 62,000 ⁠after rebounding 178,000 in March, a Reuters survey of economists shows.

In currency markets, the euro nudged higher and last fetched $1.1765. Sterling was at $1.3620, up 0.2 per cent as UK local elections came into focus.

The dollar index , which measures the US currency against six units, was a touch lower at 97.892.

The yen remained in the spotlight after spikes in recent sessions prompted ⁠market speculation that Tokyo had intervened to support the long-battered currency.

The yen was little changed at 156.25 per dollar, having hit a 10-week high of 155 on Wednesday.

OCBC analysts said intervention was unlikely to shift the broader trend without "stronger policy support," for example from the BOJ or relief from oil prices and US ⁠yields, maintaining a year-end target of 155.

Japan's top currency diplomat Atsushi Mimura said the country faced no constraints on how often it can intervene and was in daily contact with U.S. authorities.

US Treasury Secretary Scott Bessent is due to visit Tokyo next week, and analysts expect he will discuss yen moves with Japanese counterpart, Satsuki Katayama.