Stocks hit records on tech earnings, oil slide from prospect of Iran deal
Market Reactions to Iran Deal Prospects and Tech Earnings
By Lawrence Delevingne and Harry Robertson
Stock Market Surges and Oil Price Drop
May 6 (Reuters) - Stocks surged to fresh records and oil prices dropped on Wednesday after a report that the United States and Iran are closing in on an agreement to end their war, while momentum in AI-driven trades accelerated.
Oil Market Movements
Brent crude, the global benchmark, initially plunged to just below $100 per barrel, its lowest in two weeks, given the importance of oil passing through the Strait of Hormuz. Brent settled 7.83% lower at $101.27 a barrel. U.S. West Texas Intermediate crude <CLc1> fell about 7%, to $95.08.
Wall Street and Global Stock Indices
On Wall Street, a humming U.S. corporate profit engine continued to rally U.S. stocks to record levels. The Dow Jones Industrial Average added 1.24%, while the S&P 500 rose 1.46%, and the Nasdaq Composite jumped 2%, both fresh highs.
Europe's STOXX 600 index extended its gains and was last up 2.2% after climbing 0.7% a day earlier. MSCI's All-Country World Index climbed 1.64% to a fresh record.
Market Sentiment and Analyst Commentary
"A pretty punchy move on the back of those stories, almost as if the market has shifted into 'buy everything' mode," said Michael Brown, senior research strategist at Pepperstone.
"It's difficult to say how close to a deal we might be," Brown said. "Market participants, though, aren't going to wait for confirmation of good news and are essentially now front-running a positive outcome."
Currency and Bond Market Movements
The U.S. dollar, which has been a safe haven during the Iran war, dropped 0.3% against its major peers, reflecting investor hopes for a possible deal.
The yen rose by as much as 1.8% against the dollar in a swift move, triggering speculation of another round of intervention.
Meanwhile, yields on government bonds fell along with oil prices as traders dialed down their bets on central bank rate hikes. The 10-year U.S. Treasury yield fell 6.4 basis points to 4.352%.
Although stocks have rallied sharply, volatility in energy and bond markets could weigh on global growth. Oil prices are around 35% higher than they were when the conflict began in late February, while 10-year Treasury yields are around 40 bps higher.
AI Rally Boosts Global Stocks
AI RALLY BOOSTS GLOBAL STOCKS
Chipmakers and Tech Sector Performance
In the United States, shares in chipmaker Advanced Micro Devices jumped around 18.6% as the company forecast second-quarter revenue above Wall Street expectations, helping drive AI enthusiasm across markets.
Rival Intel also rose to a record high, while chip designer Arm Holdings and chipmaker Qualcomm similarly surged.
Asia-Pacific Market Highlights
The broadest index of Asia-Pacific shares outside Japan jumped 3.2%. Samsung Electronics surged 14%, topping a $1 trillion market value and overtaking Berkshire Hathaway.
Reporting Credits
(Reporting by Lawrence Delevingne in Boston, Harry Robertson in London and Gregor Stuart Hunter in Singapore; Editing by Thomas Derpinghaus, Kirsten Donovan, Joe Bavier, Nick Zieminski, Will Dunham and Nia Williams)
