Markets around the world reacted strongly to reports that the United States and Iran were nearing a brief memorandum intended to ease hostilities in the Gulf. The proposal, reported by Axios, is described as a one-page document that would include provisions to unblock the Strait of Hormuz. The same report said U.S. officials expect Iranian responses on key points within 48 hours. The development came after U.S. President Donald Trump said he would pause an operation to reopen Gulf shipping - an initiative referred to as "Project Freedom" - only days after it began.
Oil prices fell sharply on the apparent progress toward a de-escalation. Brent crude traded down to around $100 per barrel following the reports, reflecting rapid re-pricing of risk in maritime oil routes.
Equities, meanwhile, climbed. MSCI’s all-country index reached an all-time high on Wednesday as investors reacted to both the peace prospects and stronger demand expectations for artificial intelligence. Wall Street futures advanced ahead of the opening bell, and European stocks rose to a two-week high after markets opened.
Regional moves and corporate drivers
In Asia, South Korea’s KOSPI surged past the 7,000 mark for the first time. The move was led by a rally in semiconductor shares, with Samsung Electronics jumping 12% and entering the ranks of trillion-dollar market capitalisation stocks. U.S. markets also marked records, aided by significant chipmaker moves: Intel climbed 13% on reports it had talks with Apple about producing main processors for Apple devices, while AMD rose 16% in extended trading after raising demand forecasts.
Analysts pointed to upgraded AI spending estimates as a key bullish catalyst for global bourses, joining the immediate relief rally driven by the reported U.S.-Iran understanding.
Bonds, currencies and political risks
Despite the equity gains, long-term government bonds were under renewed pressure. The U.S. 30-year Treasury yield briefly topped 5% on Tuesday before retreating - the eighth occasion it has breached that level in the past three years. British long-term borrowing costs also climbed, pushing gilts to their highest yields since 1998.
In currency markets, the Japanese yen strengthened again for at least the fourth time in a week, touching 155 per dollar before giving back some gains. That move fueled continued speculation about intervention by Tokyo; sources had indicated Tokyo stepped in to support the currency in the prior week.
The pressure on gilts comes ahead of UK local elections on Thursday. Observers note that a weak showing for the ruling Labour Party could intensify political pressure on Prime Minister Keir Starmer, potentially increasing political uncertainty in the near term.
Calendar and data ahead
This week will feature a packed corporate earnings slate in the United States along with important labor-market data. Companies reporting on Wednesday include Disney, Uber and Apollo, with other corporate releases scheduled through the week. The United States employment report for April is due on Friday, with consensus expectations calling for an increase of 62,000 jobs, down from March’s 178,000.
Central bankers and regional Fed officials are also scheduled to speak, including the St. Louis Fed’s Alberto Musalem and the Chicago Fed’s Austan Goolsbee, adding to a full calendar of macro commentary that could influence market direction.
Chart of the day
According to LSEG research, S&P 500 companies are on track to post aggregate earnings growth of 28% year-over-year for the first quarter, which would be the strongest quarterly profit growth since 2021. That estimate was 14% a month ago. LSEG’s outlook for full-year 2026 earnings growth has risen to 23%, up from 17% at the start of the year.
What to watch today
- U.S. corporate earnings: Apollo, DoorDash, Uber, Walt Disney, Warner Bros
- Speeches by St. Louis Fed’s Alberto Musalem and Chicago Fed’s Austan Goolsbee
The near-term market narrative remains shaped by two competing forces: the potential for de-escalation in the Gulf, which has quickly reduced an immediate geopolitical risk premium, and ongoing macro and market dynamics - notably long-term bond yields and FX intervention speculation - that keep volatility elevated.
For readers tracking asset allocation and sector exposure, the day’s moves underscore the sensitivity of energy, semiconductors and financial markets to both geopolitical headlines and evolving technology-driven demand expectations.