Expectations of Extended U.S.-Iran Ceasefire Boost Asia-Pacific Markets; Japanese Stocks Hit Record High, Taiwan’s Stock Market Value Surpasses UK for First Time

Asia-Pacific markets rose across the board on Thursday, supported by expectations that the U.S. and Iran may extend their ceasefire agreement, as risk assets continued to recover. Japan’s stock market led the Asia-Pacific region, with technology stocks serving as the core driver of gains. The Nikkei 225 Index surged more than 2% in a single day to hit an all-time high. The total market capitalization of Taiwan’s stock market climbed to $4.14 trillion, surpassing the UK’s stock market for the first time to become the world’s seventh-largest. AI hardware-related themes continued to attract capital inflows, standing out as a key market highlight.

On Thursday, the MSCI Asia Pacific Index rose 1.2%, approaching levels seen before the outbreak of the U.S.-Iran conflict. The sharp improvement in market sentiment stemmed mainly from hopes of easing tensions between the two nations — reports indicated the U.S. and Iran were close to a framework agreement to end the conflict, considering a two-week extension of the current ceasefire, and had made “major breakthroughs” in nuclear negotiations. However, Iran’s Foreign Ministry later stated it could not confirm whether the two sides would prolong the ceasefire, and the White House denied rumors that it had asked Iran to extend the truce, leaving some uncertainty over the regional situation.

Although the ultimate trajectory of the U.S.-Iran conflict remains unclear, investors have begun returning to equity markets. Markets widely expect the U.S. and Iran to continue negotiations to prevent further escalation in the Strait of Hormuz, and this optimistic outlook has become the core logic supporting the rally in Asia-Pacific stocks.

Tim Waterer, Chief Market Analyst at KCM Trade, commented:

“Traders across Asia are clinging to hopes that fresh peace talks between the U.S. and Iran will yield tangible progress in the coming days. Oil prices falling below $100 a barrel, combined with positive diplomatic signals, have jointly lifted risk appetite in global stock markets.”

## Key Asset Performance Summary

As ceasefire expectations intensified, commodities, foreign exchange and bond markets all saw notable moves, with details as follows:

- **Crude Oil**: Brent crude held at around $95 per barrel, while West Texas Intermediate (WTI) edged up 0.1% to settle at roughly $91.42 per barrel — both well off their peaks during the conflict.

- **Bond Market**: Falling oil prices eased inflation concerns, pushing the U.S. 10-year Treasury yield down 1 basis point to 4.27%.

- **Precious Metals**: Gold rose 0.6% to around $4,820 per ounce, and silver gained 1.5% to about $80 per ounce, as safe-haven assets firmed modestly.

- **Foreign Exchange**: The U.S. dollar remained under pressure, with the Bloomberg Dollar Spot Index logging its longest losing streak since December 2006. The Australian dollar climbed to its highest level since June 2022 against the greenback, the Japanese yen strengthened to 158.58 per dollar, and the offshore Chinese yuan was little changed at 6.8151.

## Japanese Stocks Lead Asia-Pacific; Tech Stocks the Main Driver

Japan’s equity market delivered an especially strong performance on Thursday, leading the Asia-Pacific region, with sharp gains in technology and consumer cyclical stocks steering the market higher. The TOPIX Index rose 1.33%, and the Nikkei 225 Index jumped 2.43% to close at a record high, extending its recent uptrend.

*(Chart: Nikkei 225 Index over the past year)*

Outside Japan, South Korea’s stock market also traded firmly. The KOSPI Index advanced more than 2%, and the small-cap Kosdaq Index gained 1.10%, with a notable pickup in trading activity.

In contrast, Australian stocks underperformed. The S&P/ASX 200 Index fell 0.6% on Thursday. Local data showed Australia’s March employment figures released the same day revealed a 1.4% year-on-year rise in employment, with the unemployment rate steady at 4.3%.

Bloomberg strategist Mark Cranfield noted that major Asian equity indices were enjoying another active trading session, as investors shifted focus from geopolitical tensions back to corporate profitability. He added that the tug-of-war between short-term inflation pressures and medium-term growth risks has kept bond yield curves relatively stable, a positive backdrop for equities.

However, Matthew Haupt, Portfolio Manager at Wilson Asset Management, warned:

“The market has largely priced in optimism over a U.S.-Iran truce. From here, fresh positive catalysts will be needed to drive further gains, and broad-based buying is nearing its end.”

## Taiwan’s Stock Market Value Surpasses UK; AI Themes the Core Catalyst

Taiwan’s stock market rising to the world’s seventh-largest by capitalization marked one of the most significant events in Asia-Pacific markets this week. Data compiled by Bloomberg showed that as of Wednesday, Taiwan’s total stock market capitalization reached $4.14 trillion, exceeding the UK’s approximately $4.09 trillion, officially making it the world’s seventh-largest stock market.

In terms of performance, the Taiex Index has rallied 16% so far this month and more than 25% year-to-date. It rose as much as 0.7% intraday on Thursday, extending its seven-day winning streak amid strong bullish sentiment.

*(Chart: Taiex Index performance year-to-date)*

Taiwan Semiconductor Manufacturing Company (TSMC), the benchmark index’s heavyweight constituent, also hit a record high. Robust revenue growth has further solidified its central role in the global AI supply chain, serving as a key pillar of Taiwan’s stock market rally.

*(Chart: TSMC share price over the past year)*

On the capital flow front, foreign investors have ramped up their exposure to Taiwan’s equities significantly. Net foreign buying of Taiwan stocks reached $8.9 billion in April, putting it on track for a record monthly inflow. Notably, foreign investors pulled a record $28.7 billion out of the market in March, marking a sharp reversal in flows within just one month.

Yoon Ng, Head of Asset Management Growth Solutions for Asia-Pacific at Broadridge Financial Solutions, said:

“Taiwan’s stock market continues to be viewed by global investors as a core proxy for AI hardware. As long as momentum in global AI capital spending holds up, capital inflows should remain supportive.”

By comparison, UK stocks have seen muted performance. The FTSE 100 Index has gained roughly 6% year-to-date, held back by sticky inflation and higher interest rates relative to other European economies.

*(Note: Chart: FTSE 100 Index performance year-to-date)*

Still, strategists at Barclays, Citigroup, HSBC and other institutions remain upbeat on the FTSE 100 as a geopolitical hedge or defensive allocation. A key reason is that commodity-linked sectors such as energy and basic materials account for nearly one-fifth of the UK’s total stock market value, offering strong resilience.

A Bank of America survey published in April showed the UK is the second-most popular market in Europe after Switzerland, yet a net 16% of global fund managers remain underweight UK equities, reflecting continued caution toward the market.

## Review of Oil, Dollar and Bond Market Dynamics

As expectations of a U.S.-Iran ceasefire continued to build, commodities and foreign exchange markets adjusted notably, with mild volatility also seen in bonds. Key dynamics included:

Crude oil retreated as geopolitical risks eased, with Brent crude holding near $95 a barrel and WTI crude edging up 0.1% to $91.42 — both sharply lower than during the height of the conflict, effectively easing inflationary pressure expectations.

In fixed income, softer oil prices further dampened inflation worries, pushing the U.S. 10-year Treasury yield down 1 bp to 4.27% and keeping the yield curve relatively stable.

Precious metals firmed moderately: gold rose 0.7% to around $4,824 an ounce, and silver gained 1.5% to $80 an ounce, supported by residual safe-haven demand.

In currency markets, the U.S. dollar stayed under heavy pressure, with the Bloomberg Dollar Spot Index posting its longest losing streak since December 2006. Non-U.S. currencies strengthened broadly: the Australian dollar hit its highest level since June 2022, the yen firmed to 158.58 per dollar, and the offshore yuan traded flat at 6.8151 with limited volatility.

Goldman Sachs analysts including Kamakshya Trivedi wrote in a recent note that North Asia, emerging Europe and Latin America have led the rebound in global risk assets, while ASEAN oil importers and India have lagged.

“Given ongoing disruptions to physical energy supplies, we expect this pattern of regional divergence to persist,” they said.

## Risk Warning and Disclaimer

The market is subject to risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situations or needs of individual users. Users should consider whether any opinions, views or conclusions in this article align with their particular circumstances. Any investment made based on this article is at the user’s own risk.