Asian Stock Markets Surge to Record Highs, Oil Prices Begin to Ease

Asian stock markets surged to all-time highs during Thursday’s trading (7/5/2026), propelled by market optimism regarding the prospects of a peace agreement in the Middle East. This positive sentiment also led to a weakening of the US dollar, while global oil prices stabilised after a sharp drop in the previous session. Citing Reuters, the MSCI Asia Pacific index excluding Japan climbed 1 per cent, setting a new record high. Over the past week, the index has strengthened by around 7 per cent. The rise in Asian markets was driven by a rally in artificial intelligence (AI)-based technology stocks, following stronger-than-expected financial results from technology issuers. Gains were also seen in the South Korean and Taiwanese stock markets, both of which hit new record highs. Senior analyst at Capital.com, Kyle Rodda, stated that the current market movements reflect investor optimism about the chances of achieving a peace deal in the Middle East. Iran is reportedly reviewing a peace proposal that could end the war that began at the end of February. Nevertheless, several key issues remain unresolved, including US demands for Iran to halt its nuclear programme and to reopen the Strait of Hormuz. The Strait of Hormuz is a primary concern for markets as it is a crucial route for global oil distribution. Previous fears of its closure had triggered a surge in global energy prices. Despite this, oil prices remain about 40 per cent higher than when the conflict started. This increase in energy prices is seen as a major challenge for the global economy, as it could fuel inflation. OCBC analysts in their research suggest that oil prices are likely to remain elevated even if the Strait of Hormuz is reopened in the coming weeks. According to them, damage to energy infrastructure and precautionary stockpiling of oil could slow any price decline.