Anticipation that the United States and Iran may extend their ceasefire agreement pushed Asia-Pacific markets higher across the board on Thursday, with risk assets continuing to recover.
On Thursday, the MSCI Asia Pacific Index rose 1.2%, approaching pre-war levels. Japan led the region, with technology stocks serving as the main driver. Taiwan's stock market capitalization climbed to $4.14 trillion, surpassing the UK to secure seventh place globally, as AI hardware concepts continued to attract capital inflows.
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Wallstreetcn reported that the US and Iran are reportedly close to reaching a framework agreement to end the conflict, considering a two-week extension of the ceasefire and achieving &#34;major breakthroughs&#34; in nuclear negotiations. However, Iran's Ministry of Foreign Affairs stated that whether the ceasefire will be extended between Iran and the US cannot be confirmed, and the White House denied requests to extend the ceasefire.
Although the direction of the war remains unclear, investors have returned to the stock market as there is a general expectation that the US and Iran will continue negotiations to prevent further escalation of the situation in the Strait of Hormuz.
Tim Wauters, Chief Market Analyst at KCM Trade, stated:
<blockquote>
Traders across Asia are holding onto hope, expecting new rounds of peace negotiations between the US and Iran to make progress in the coming days. Oil prices falling below $100, combined with hopes for diplomatic breakthroughs, have jointly boosted stock markets.
</blockquote>
The performance of major assets is as follows:
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<ul>
<li>Brent crude oil remained around $95 per barrel, while WTI crude oil rose slightly by 0.1% to approximately $91.42 per barrel, both significantly lower than peak conflict levels.</li>
<li>The decline in oil prices alleviated inflation pressure expectations, causing the US 10-year Treasury yield to fall by one basis point to 4.27%.</li>
<li>Gold rose 0.6% to approximately $4,820 per ounce, and silver rose 1.5% to approximately $80 per ounce.</li>
<li>The US dollar continued to face pressure, with the Bloomberg Dollar Spot Index setting a record for its longest consecutive losing streak since December 2006. The Australian dollar rose to its highest level against the US dollar since June 2022, the yen appreciated to 158.58 per dollar, and the offshore RMB remained relatively flat at 6.8151.</li>
</ul>
</blockquote>
<h2>Japan Leads Asia-Pacific, Technology Stocks Drive Performance</h2>
The Tokyo Stock Exchange (TOPIX) Index rose 1.33%, and the Nikkei 225 Index surged 2.43% on Thursday to a record high, led by technology and consumer cyclical stocks.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f2e01945-2c6f-49cd-8b3c-7d026984e55c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f2e01945-2c6f-49cd-8b3c-7d026984e55c.png"/>
(Trend of the Nikkei 225 Index over the past year)
The Korea Composite Stock Price Index rose over 2%, while the small-cap Kosdaq Index increased by 1.10%.
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The S&amp;P/ASX 200 Index in Australia fell by 0.6%, lagging behind other markets. According to Wallstreetcn, employment data released in Australia on Thursday showed that March employment numbers grew by 1.4% year-over-year, and the unemployment rate remained unchanged at 4.3%.
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Bloomberg strategist Mark Cranfield noted that major Asian indices are enjoying another active trading day, with investor focus shifting from war back to corporate profitability. The tug-of-war between short-term inflation pressures and mid-term economic growth risks has kept the bond yield curve within a relatively stable range, which is also a positive factor for the stock market.
Matthew Haupt, Portfolio Manager at Wilson Asset Management, cautioned that the market has largely priced in the ceasefire sentiment:
<blockquote>
From here, new catalysts are needed to drive further market gains, and systematic buying is essentially nearing its end.
</blockquote>
<h2>Taiwan Market Cap Overtakes UK, AI Concepts Become Core Driver</h2>
Taiwan's stock market capitalization surged to seventh place globally, becoming one of the landmark events for Asia-Pacific markets this week.
According to Bloomberg compiled data, as of Wednesday, Taiwan's total stock market capitalization reached $4.14 trillion, surpassing the UK's approximately $4.09 trillion to become the world's seventh-largest stock market.
The Taiwan Weighted Index has gained 16% month-to-date and over 25% year-to-date. On Thursday, intraday gains reached a high of 0.7%, extending a seven-day winning streak.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/0e674a81-949b-4bd0-bbc9-0e9c4efb3f2e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/0e674a81-949b-4bd0-bbc9-0e9c4efb3f2e.png"/>
(Taiwan Weighted Index cumulative gain of over 25% year-to-date)
TSMC shares simultaneously hit a record high, with strong revenue growth further consolidating its core position in the global artificial intelligence supply chain.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f1738346-aa9c-469c-a182-2a9638be78e7.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f1738346-aa9c-469c-a182-2a9638be78e7.png"/>
(TSMC share price trend over the past year)
Foreign capital net purchases of Taiwan stocks reached $8.9 billion in April, potentially setting a record for the largest monthly net inflow, following a record $28.7 billion net outflow in March.
Yoon Ng, Head of Asia Pacific Asset Management Growth Solutions at Broadridge Financial Solutions, stated:
<blockquote>
Taiwan continues to be viewed as a proxy for AI hardware. As long as the momentum for AI capital expenditure persists, capital inflows should remain supportive.
</blockquote>
In contrast, the UK FTSE 100 Index has gained approximately 6% year-to-date, weighed down by sticky inflation and interest rate levels relatively higher than other European economies.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3e6fbf80-aad1-4932-ac5c-6712be7ef8de.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3e6fbf80-aad1-4932-ac5c-6712be7ef8de.png"/>
(FTSE 100 Index gain of approximately 6% year-to-date)
However, strategists at Barclays, Citigroup, and HSBC still favor the FTSE 100 as a geopolitical hedge or defensive allocation option, citing that commodity-related sectors such as energy and basic materials account for nearly one-fifth of the UK's market capitalization.
A Bank of America survey in April found that the UK is the second most popular market in Europe after Switzerland, but global fund managers still maintain a net 16% underweight position in UK stocks.
<h2>Dynamics in Oil Prices, the Dollar, and Bond Markets</h2>
With rising expectations for a ceasefire, significant changes occurred simultaneously in the commodities and foreign exchange markets.
Brent crude oil remained around $95 per barrel, while West Texas Intermediate (WTI) crude oil rose slightly by 0.1% to approximately $91.42 per barrel, both significantly lower than peak conflict levels.
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The decline in oil prices alleviated inflation pressure expectations, causing the US 10-year Treasury yield to fall by one basis point to 4.27%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e3271079-ff09-474b-ae30-8e783ec6f168.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e3271079-ff09-474b-ae30-8e783ec6f168.png"/>
Gold rose 0.7% to approximately $4,824 per ounce, and silver rose 1.5% to approximately $80 per ounce.
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The US dollar index continued to face pressure, with the Bloomberg Dollar Spot Index setting a record for its longest consecutive losing streak since December 2006. The Australian dollar rose to its highest level against the US dollar since June 2022, the yen appreciated to 158.58 per dollar, and the offshore RMB remained relatively flat at 6.8151.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/486ce337-73d8-4410-922c-d6a61bdd1fbb.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/486ce337-73d8-4410-922c-d6a61bdd1fbb.png"/>
In a report, Goldman Sachs analysts Kamakshya Trivedi and others pointed out that Northeast Asia, Emerging Europe, and Latin America led this rebound, while ASEAN oil-importing countries and India lagged:
<blockquote>
Given the continued disruption of physical supply, we expect this divergence to persist.
</blockquote>

03153

Japan leads the region with technology stocks as the primary driver. The TOPIX rose 1.33%, while the Nikkei 225 surged 2.43% on Thursday to a record high, led by tech and consumer cyclical stocks. Taiwan's market capitalization reached $4.14 trillion, overtaking the UK to rank seventh globally, as AI hardware concepts continue to attract capital inflows

- Optimism regarding a potential extension of the U.S.-Iran ceasefire has boosted the Asia-Pacific markets, with the MSCI Asia-Pacific Index rising 1.2%.  
- Taiwan's stock market has surpassed the U.K. in total market capitalization, reaching $4.14 trillion, fueled by strong AI hardware investments and significant foreign inflows.  
- Despite ongoing geopolitical uncertainties, declining oil prices and eased inflation expectations are contributing to a favorable investment climate, as bond yields remain stable.

Wallstreetcn

ISHRS MSCI Japan

BetaShares Holdings Pty Ltd.

CSOP NIKKEI225

ISHRS MSCI Taiwan Capped

HS JAPAN TPX100

Asset Management One Co., Ltd.

PREMIA TW50

Franklin FTSE Taiwan

FI2 CSOP NIKKEI

Sumitomo Mitsui Trust Holdings, Inc.

TRMSCITAIWAN

Expectations of Extended US-Iran Ceasefire Boost Asia-Pacific Markets; Japanese Stocks Hit Record Highs, Taiwan Market Cap Surpasses UK