Stocks back to record-setting ways on Middle East truce hopes

World stocks climbed for a 10th straight day to hit new record highs on Thursday, as equity markets completed a remarkable six-week round trip from the heavy selloffs sparked by the United States' and Israel's attacks on Iran. Optimism over a deal to end the war was boosted by comments from both Washington and Tehran and with $95-a-barrel oil now well off the near $120 peaks of March, MSCI's main world stocks index advanced 0.25%. It was its first all-time high since the hostilities erupted at the end of February, and after reassuring global bank earnings lifted the U.S. S&P 500 above 7,000 points on Wednesday, capped an 11% rebound for MSCI World. "It almost looks like the perfect V-shaped recovery," said Standard Chartered's Chief Investment Officer for Africa, Middle East and Europe, Manpreet Gill, explaining that U.S. tech stocks and the easing of oil prices had been big drivers in the bounce. European stocks weren't back to their pre-war highs, but they also moved 0.2% higher. The region's government borrowing costs dipped again too as traders dialled back bets of higher interest rates, though bonds also remain well off pre-conflict levels. Gill added that if the spike in energy prices does now fade and the impact on inflation proves a temporary one-off, then leading central banks are likely to try to "look through" the move. "I think what everyone's going to be obviously quite cautious of is, whether there are any second-round effects that we see that come later," he said. OIL ON THE BOIL Back in oil markets, Brent crude hovered just above $95 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. The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, was around 0.1% stronger, after eight consecutive day of declines. Aside from war watching, U.S. President Donald Trump has reignited his spat with Fed Chair Jerome Powell, threatening to fire him from his standalone seat on the U.S. central bank's Board of Governors if Powell does not vacate it when his term as Fed chief ends on May 15. The dollar's move also meant the euro lost traction, having edged to within touching distance of its highest level since the war began at $1.182325. Japan's yen firmed to 158.71 meanwhile after the country's finance minister said Tokyo and the U.S. had agreed to intensify communication on exchange rates following her meeting with U.S. Treasury Secretary Scott Bessent on Wednesday. "Markets are now basically looking past the conflict and pricing that there's going to be some kind of settlement," said Khoon Goh, the head of Asia research at ANZ. "As markets are pricing out the war premium, we could see the dollar coming under further pressure and resuming the downtrend that has been established since basically last year." China's yuan traded at near a three-year high of 6.8152 per dollar in offshore markets and Chinese stocks rose over 1% after forecast-beating data showed the economy grew 5.0% in the first quarter as strong exports offset still-sluggish domestic consumption. AUSSIE DOLLAR AND GOLD GAIN MSCI's broadest gauge of Asia-Pacific shares rose 1.2% as Japan's Nikkei 225 jumped 2.4% to a fresh record. Taiwan and Korea's markets weren't too far behind either as Taiwan Semiconductor Manufacturing Co (TSMC) , a linchpin of the AI sector, posted a 58% surge in quarterly profits. "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. Gold clawed back 0.8% to $4,825.79 while in cryptocurrencies bitcoin was up 0.3% at $75,084.56 and ether was down 0.2% at $2,359.89. The Aussie dollar also rose 0.3% to a four-year high of $0.71890 after data there showed 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%. "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.