07/05/2026
Buoyed by optimism that the United States and Iran are close to reaching an agreement to end their nearly 10-week conflict, global stock markets have rallied, injecting new momentum into the current uptrend that has driven global equities to record highs, with various assets also experiencing significant fluctuations.
In terms of stock markets, major global stock indices generally moved higher. The MSCI All-Country World Index rose 0.3%, while the MSCI Asia Index soared 1.9% to a record high. This performance was mainly driven by the catch-up rally of Japan’s Nikkei 225 Index, which also hit an intraday high; on May 7th, the Nikkei 225 Index further surged in early trading, breaking above the 62,000-point mark for the first time to a new all-time high, jumping 4.91% as of press time. Meanwhile, South Korea’s stock market, a bellwether for tech investment, performed impressively, officially surpassing Canada by market capitalization to become the world’s seventh-largest stock market — this breakthrough was fueled by strong demand for artificial intelligence chips, with chip giants such as Samsung and SK Hynix driving South Korea’s stock index higher. Year-to-date, South Korea’s KOSPI has risen more than 70%, while Canada’s stock market, which is concentrated in the energy and financial sectors, has only gained 7%.
Tech stocks emerged as a key driver of the rally, delivering outstanding performance. Among them, SoftBank Group’s stock soared 18%, mainly driven by expectations of investment returns from its stake in OpenAI — OpenAI’s valuation has risen sharply recently, nearly doubling the value of SoftBank’s previous related investments and potentially offsetting losses in its Vision Fund 2; Taiwan Semiconductor Manufacturing Company (TSMC) also rose 3.3%, continuing the strong performance of the tech sector.
U.S. stocks and Asian stocks moved in tandem, with Wall Street closing at a record high on Wednesday, followed by a synchronized rally in Asian stocks. One of the key factors supporting the rise in U.S. stocks is the strong corporate earnings performance — about 80% of the companies in the S&P 500 Index reported better-than-expected earnings this quarter, leading traders to generally bet on further stock market gains. Institutions such as Goldman Sachs are also optimistic about the continuation of the bull market, having raised their target price for the S&P 500 Index and predicting that the index’s constituent companies will see a 7% year-on-year increase in earnings in 2026.
In the energy market, Brent crude recovered most of the previous session’s losses, trading slightly below $102 per barrel (closing at $101.27 per barrel on May 6th). The market generally expects that if the U.S. and Iran reach an agreement, it will help restore oil transportation through the critical Strait of Hormuz, easing concerns about global energy supply. Previously, amid escalating U.S.-Iran tensions, Brent crude had risen to as high as $114.44 per barrel; on May 6th, it briefly fell to $96.75 per barrel due to optimism about the agreement, followed by a rebound, highlighting the significant impact of geopolitics on oil prices.
The foreign exchange and bond markets also showed significant fluctuations. The U.S. Dollar Index hovered near pre-war levels; U.S. Treasury prices maintained an upward trend, although the 30-year U.S. Treasury yield briefly returned above 5% earlier this week, it had fallen back by May 6th. Traders reduced their bets on Federal Reserve interest rate hikes due to slowing inflation expectations — however, market expectations for the Fed’s policy path are still adjusting, with interest rate swap contracts showing that the probability of the Fed raising rates first and then cutting them by April 2027 has exceeded 50%. The expectation of interest rate cuts also boosted the appeal of gold, a non-yielding asset, with gold prices rising for the third consecutive trading day. As of May 7th, the London spot gold price reached $4,699.4 per ounce, approaching the $4,700 per ounce mark.
The Japanese yen remains the focus of market attention. On Wednesday, the yen rose amid speculation that Japanese monetary authorities had intervened in the foreign exchange market; it then remained basically flat near 156.30 yen per U.S. dollar during Asian trading hours. Notably, the Japanese government and central bank implemented their first yen-buying intervention since 2024 on April 30th, and the market speculates that the recent yen fluctuations are also related to potential intervention by the authorities. Analysts believe that the Japanese authorities aim to prevent the yen exchange rate from moving towards 160 yen and crack down on speculative short positions.
In the bond market, the Asian primary U.S. dollar bond market became significantly more active on Thursday, with four issuers launching U.S. dollar bonds, including multi-currency benchmark bonds issued by the Hong Kong government. Driven by optimism about a potential U.S.-Iran agreement, bond spreads in the region hit an all-time low, reflecting an increase in market risk appetite.
It is reported that negotiations on the U.S.-Iran agreement are still ongoing. According to a person familiar with the matter, the U.S. side has submitted a one-page memorandum of understanding, which focuses on gradually reopening the Strait of Hormuz and lifting U.S. sanctions on Iranian ports. The person also stated that detailed negotiations on Iran’s nuclear program will be carried out in subsequent stages, and no formal agreement has been reached between the two sides so far.
Previously, the Trump administration had suspended a short-term U.S. mission aimed at providing safe passage for merchant ships in the Strait of Hormuz, a crucial waterway for global oil and gas transportation. Currently, Iran’s response to the matter has not yet been announced, and the market is closely monitoring its subsequent attitude.
Overall, the current fluctuations in various global assets reflect the market’s optimistic expectations for the easing of tensions in the Middle East. The mitigation of tensions has not only helped global stock markets erase the losses caused by the war and push stock indices to new highs but also reduced market concerns about inflation and further boosted the momentum of AI-related investments.
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