Global stocks surge on Iran peace hopes and AI euphoria

SINGAPORE/LONDON, May 6 (Reuters) - Stocks leapt as oil prices dropped on Wednesday after U.S. President Donald Trump touted the "great progress" that has been made towards a peace agreement with Tehran, while momentum in AI-driven trades accelerated.

Trump said he would briefly pause an operation dubbed Project Freedom escorting ships through the Strait of Hormuz, which carries about a fifth of the world's oil and liquefied natural gas; it has been blockaded by Iran since late February, triggering a global energy crisis.

Brent crude, the global benchmark, fell 3.2% to $106.40 per barrel. That helped stocks to push higher after a rally on Tuesday.

Europe's STOXX 600 index jumped 1.5% in morning trading after climbing 0.7% a day earlier. MSCI's All-Country World Index climbed 0.7% to a fresh record.

Meanwhile, futures for the S&P 500 rose 0.3%, a day after the index rallied 0.8% to hit its latest record high, driven by strong company earnings and excitement about artificial intelligence.

"It seems equity investors are still looking to put money to work and are jumping on positive-sounding news from the Gulf," said Chris Turner, head of global markets at ING.

"The prospect of a permanent peace deal remains highly uncertain, however, and oil looks set to remain very volatile."

Although stocks have rallied sharply in recent weeks, oil and bond markets are pointing to a potentially large impact on the global economy from the conflict.

Oil prices remain almost 50% higher than when the conflict began in late February. Yields on 10-year U.S. Treasuries, which set the tone for borrowing costs around the world, have risen around 40 basis points.

AI RALLY DRIVES ASIAN STOCKS HIGHER

The broadest index of Asia-Pacific shares outside Japan jumped 2.9%. The surge was led by a 6.5% charge for South Korea's KOSPI, which reopened after a holiday.

Samsung Electronics jumped 14%, topping a $1 trillion market value and overtaking Berkshire Hathaway.

"Due to the capex spend we are seeing from (AI) hyperscalers in the U.S., the earnings growth trajectory for sectors such as semiconductors, tech hardware, industrials and materials in Asia exceeds anything I have seen in a long time," said Rushil Khanna, head of equity investments for Asia at Ostrum, an affiliate of Natixis Investment Managers.

In the U.S., shares in chipmaker Advanced Micro Devices jumped 16% in extended trading as the company forecast second-quarter revenue above Wall Street expectations on Tuesday, helping drive AI enthusiasm across markets.

In foreign exchange markets, the yen strengthened sharply in afternoon trading, gaining as much as 1.8% to 155 against the dollar as traders remained on the lookout for fresh intervention by authorities in Tokyo in support of the beleaguered currency.

"There's a bit of optimism around a U.S.-Iran 'deal' at the moment; it's possible the authorities decided that was a good moment to give the yen an extra nudge," said Thomas Mathews, head of markets for Asia Pacific at Capital Economics in Wellington.

"That said, it might just be thin holiday-affected trade; best to wait and see how it fares towards the end of the week."

The U.S. dollar, which has been a safe haven during the Iran war, fell 0.3% against its major peers, reflecting investor hopes about a possible deal.

Meanwhile, yields on government bonds fell along with oil prices as traders dialled down their bets on central bank rate hikes.

The key 10-year U.S. Treasury yield fell 5 basis points to 4.37%.

(Reporting by Gregor Stuart Hunter in Singapore and Harry Robertson in London; Editing by Shri Navaratnam, Sam Holmes and Thomas Derpinghaus)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 6, 2026 at 4:42 AM.