Bonds and Stocks Rise as the Iran Deal Brings Relief – Asia Market Wrap

Global markets surged after the US and Iran reached an agreement to reopen the Strait of Hormuz, easing concerns over energy supply disruptions and fueling a broad risk-on rally. MSCI’s Asia Pacific Index jumped around 3%, while US and European equity futures gained more than 1.2%. Japan’s Nikkei 225 headed for a record close as investors welcomed the prospect of a lasting end to the conflict.

Oil prices tumbled as geopolitical risk premiums rapidly unwound. Brent crude fell more than 4%, putting it on track to trade near $83 a barrel, its lowest level in three months. The restoration of Middle Eastern oil flows is expected to ease pressure on global energy markets and reduce a key source of inflation risk for central banks.

The agreement marks a significant turning point in a conflict that has weighed on the global economy and financial markets since late February. With fears of supply disruptions fading, investors moved back into risk assets while reducing defensive positions.

Despite months of geopolitical turmoil, global equities remained remarkably resilient throughout the conflict. Enthusiasm surrounding AI continued to underpin risk sentiment, helping MSCI’s World Index repeatedly reach record highs, most recently earlier this month. The benchmark added as much as 0.6% in the latest session.

Currency markets reflected improving risk appetite, with the Dollar weakening against major peers while Bitcoin climbed to its highest level in nearly two weeks.

Commodity markets delivered a mixed picture. While crude oil fell sharply, precious and industrial metals rallied. Gold gained nearly 3%, silver jumped around 4%, and copper rose more than 1% in London as investors repositioned for a potential improvement in global growth prospects following the easing of geopolitical tensions.