Global equity markets rose on Thursday as anticipation built ahead of US President Donald Trump’s meeting with Chinese leader Xi Jinping in Beijing. Investors attributed the gains across Wall Street and Europe to hopes for easing trade tensions and progress in resolving the conflict surrounding the Strait of Hormuz.
US and European indices on the rise
The S&P 500 climbed 0.6% on Wednesday to close at 7,444.25, setting a new all-time high. The Nasdaq Composite rose 1.2% to its own record finish of 26,402.34, fueled largely by a strong performance from tech firms. Meanwhile, the Dow Jones Industrial Average dipped slightly by 0.1%, ending the session at 49,693.20.
In early European trading, the UK’s FTSE 100 gained 0.3% to reach 10,351.36, as the British economy expanded by 0.3% in March, beating analyst expectations despite the adverse impact of the conflict in Iran. France’s CAC 40 rose 0.6% to 8,057.64, while Germany’s DAX climbed 1.4% to 24,462.22.
Mixed performance in Asian markets
The picture was more nuanced across Asia. Japan's Nikkei 225 finished 1% lower at 62,654.05, despite having briefly hit an intraday record above 63,700 earlier in the session on the back of strong corporate earnings.
South Korea’s Kospi jumped 1.8% to a new record of 7,981.41, driven by a surge in tech stocks benefiting from the artificial intelligence boom. In contrast, the Shanghai Composite fell 1.5% to 4,177.92, while Hong Kong’s Hang Seng remained virtually flat at 26,389.04. Australia’s S&P/ASX 200 edged up 0.1% to 8,640.70.
Sentiment regarding the Strait of Hormuz and energy prices
Oil prices showed mixed movement as the conflict in Iran entered its third month with no clear path toward a resolution. Brent crude rose 0.2% to $105.87 (€90.42) per barrel, remaining significantly higher than the pre-conflict levels of around $70 seen in late February.
US West Texas Intermediate (WTI) crude fell 0.2% to trade at $100.86 (€86.14) per barrel. The International Energy Agency warned that supply disruptions through the Strait of Hormuz are causing global public and private oil reserves to deplete at a record pace.
The Trump-Xi summit and investor expectations
The White House reported that Trump and Xi discussed strengthening economic ties between the US and China, both agreeing that the Strait of Hormuz must remain open. Some investors expressed hope that China could leverage its close economic relationship with Iran to encourage Tehran to allow the resumption of shipping through the strait.
Accompanying Trump on his visit to China were high-profile figures such as Nvidia’s Jensen Huang, Elon Musk of Tesla, and Apple’s Tim Cook, fueling speculation about a potential easing of restrictions on H200 chip exports to China. These US business leaders met with Chinese Premier Li Qiang on Thursday, emphasizing the necessity of maintaining bilateral trade and technological exchange.
Financial and political factors amid the market rally
As markets rallied, the yield on 10-year US Treasury notes eased to 4.46% from 4.47%, though it remains well above the 3.97% level seen before the outbreak of hostilities in Iran. April data revealed a sharp spike in US wholesale prices, driven by the energy shock resulting from the Iranian conflict.
The US Senate also confirmed Kevin Warsh as the next Chair of the Federal Reserve, succeeding Jerome Powell, whom Trump had frequently criticized for failing to implement faster or deeper interest rate cuts. The US dollar strengthened slightly to 157.91 Japanese yen from 157.86, while the euro was trading at around 1.1709 US dollars.
