Global Stock Rally Builds on Iran Deal Optimism: Markets Wrap

An electronic ticker displays stock figures in Pudong's Lujiazui Financial District in Shanghai, China, on Monday, Aug. 18, 2025. A gauge of Shanghai-listed stocks closed at its highest level in a decade, as cash-rich local investors plow into a market that has surged amid easing trade tensions with the US. Photographer: Raul Ariano/Bloomberg Photo by Raul Ariano /Bloomberg

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(Bloomberg) — Equities advanced on optimism the US and Iran were nearing a deal to end their conflict, adding fresh fuel to a rally that has pushed global stocks to a series of record highs.

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The MSCI All Country World Index advanced 0.3% and MSCI’s Asian gauge jumped 1.9% to a record. That was driven by a catch-up surge in Japan’s Nikkei 225 index, which also touched an intraday high. South Korea, a bellwether for tech investments, surpassed Canada as the world’s seventh-largest equity market by value.

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Technology shares outperformed and Softbank Group Corp. surged 18%, while Taiwan Semiconductor Manufacturing Co. gained 3.3%.

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Asian gains followed Wall Street gauges also closing at record highs on Wednesday as traders boosted bets on further gains with about 80% of companies in the S&P 500 Index reporting better-than-estimated earnings in the current season. Adding to the sentiment, Brent crude held most of its losses from the prior session, trading just under $102 a barrel, on speculation a US-Iran deal will help resume the shipment of oil through crucial Strait of Hormuz.

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A Bloomberg gauge of the dollar hovered around its pre-war levels and Treasuries held their advance with traders curbing bets on Federal Reserve interest-rate hikes as inflation expectations eased. Prospects for lower rates boosted the appeal of gold, a non-yielding asset, with the yellow metal rallying for a third day to $4,700 an ounce.

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The moves reflected optimism over easing Middle East tensions as the US and Iran circled a fresh proposal to end the nearly 10-week conflict. Easing tensions helped global equities erase war-driven losses and push to fresh highs, as lower oil prices reduced inflation concerns and revived momentum in the artificial intelligence trade.

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“We remain on the path towards de-escalation, and towards an end to the conflict,” said Michael Brown, a strategist at Pepperstone in London. “While that path is clearly a rough one, so long as we remain on it, and the direction of travel remains a more optimistic one, then risk appetite should remain underpinned.”

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What Bloomberg Strategists Say…

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Asian equities are trading like a deal between the US and Iran is all but done, with investors effectively pricing in a clean exit from Middle East risk. That positioning, however, looks vulnerable to a classic buy-the-rumor, sell-the-fact turn. Even if a deal materializes, attention is likely to snap back to the real-world consequences of the conflict.

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— Mark Cranfield, MLIV. For full analysis, click here.

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The yen remains in focus, with the currency trading little changed around 156.30 per dollar in Asian trade after rallying on Wednesday amid speculation that officials are intervening in the market.

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Elsewhere, Asia’s primary dollar bond market sprang to life on Thursday, with four issuers marketing US dollar notes, including a multi-currency benchmark from the Hong Kong government. Spreads in the region hit fresh record lows on optimism over a potential US-Iran deal.