Stocks climb to new highs as traders bet on Iran truce trades

SINGAPORE — Global equities vaulted past their previous all-time highs in Asian trading on Thursday (April 16) as optimism grew about a deal to end the Iran war, while traders digested a buffet of economic data and critical earnings reports.

Morgan Stanley Capital International's All-Country World Index advanced 0.2 per cent to mark a 10th consecutive day of gains and a fresh record high as US President Donald Trump touted talks between Israel and Lebanon that he said "will happen tomorrow".

The index compiler's broadest gauge of Asia-Pacific shares outside Japan rose 1.2 per cent, putting the benchmark on track for a third consecutive day of gains, while Japan's Nikkei 225 rose 2.5 per cent to a fresh record. S&P 500 e-mini futures were 0.2 per cent higher.

"Hopes are high that a US-Iran deal may be struck over the coming days," analysts from DBS in Singapore wrote in a research note. "The Middle East conflict is no longer treated as a stress point by market participants, and we wonder if a US-Iran deal or ceasefire extension is already in the price."

On Wednesday, the S&P 500 rose 0.8 per cent and the Nasdaq Composite gained 1.6 per cent, as strong quarterly earnings from Bank of America and Morgan Stanley lifted the indexes to record highs. With around six per cent of companies reporting earnings for the quarter, 84 per cent have beaten analysts' expectations.

"As we move into the heart of earnings season, the focus is shifting back toward fundamentals, with a more idiosyncratic, stock-driven environment beginning to take hold," said Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities in New York. "This reset provides a more constructive entry point in equities, particularly across large-cap quality growth."

Taiwan Semiconductor Manufacturing Co, a linchpin of the AI sector, posted a 58 per cent surge in quarterly profit on Thursday, shrugging off fears of higher energy prices from the Middle East conflict as demand for its advanced chips soared.

"We remain constructive overall" on emerging market stocks as "underlying profit growth is likely to be strong," analysts from Goldman Sachs wrote in a research report.

Earnings in the region will be "driven by AI-related demand, which should be relatively insulated from the direct impacts of the oil shock."

In oil markets, Brent crude fluctuated between gains and losses, and was last down 0.2 per cent at US$94.71 (S$120.31) a barrel after a source briefed by Tehran told Reuters that Iran could consider allowing ships to sail freely through the Omani side of the Strait of Hormuz without risk of attack as part of proposals it has offered in negotiations with the United States.

Elsewhere, a refinery fire in Australia also raised supply concerns.

The US dollar index, which measures the greenback's strength against a basket of six currencies, was flat at 98.00, nursing a ninth consecutive day of declines as geopolitical worries eased and traders brought forward expectations of monetary policy easing from the Federal Reserve.

On Wednesday, US President Donald Trump threatened to fire Fed Chair Jerome Powell from his separate seat on the US central bank's Board of Governors if Powell does not vacate that post as well when his term as Fed chief ends on May 15, intensifying a complicated standoff that has upended the Fed's usually smooth transition of power and renewing concerns about its independence.

The euro edged up to within sight of its highest level since the war began at US$1.182325, extending its recent winning streak into a ninth consecutive day.

Chinese shares advanced 0.8 per cent after data showed that Asia's largest economy grew 5 per cent in the first quarter compared with a year earlier, beating analysts' expectations as policymakers braced for the fallout from the Iran war.

"The solid start to the year on the back of strong export performance suggests the direct impact of the Middle East conflict remains contained for now," said Junyu Tan, regional economist for North Asia at Coface in Hong Kong.

"But the outlook is not all rosy despite China's relative resilience amid energy supply chain disruptions," he added. "The export engine could still be constrained by weaker global demand if the conflict persists."

Australian shares were down 0.4 per cent and the Aussie dollar rose 0.3 per cent to a four-year high of US$0.71890 after data showed on Thursday that Australian employment rose broadly in line with expectations in March as firms hired more full-time workers, while the jobless rate held steady at 4.3 per cent.

"The latest data will reinforce the RBA's assessment that upside risks to inflation are greater than downside risks to the labour market," analysts from Capital Economics wrote in a research report, referring to the Reserve Bank of Australia.

Gold clawed back 0.8 per cent at US$4,825.79, while in cryptocurrencies, bitcoin was up 0.3 per cent at US$75,084.56 and ether was down 0.2 per cent at US$2,359.89.

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