Asia-Pacific equities surged to fresh records on Thursday, with the MSCI All Country Asia Pacific Index up 1.9 per cent and the broader MSCI All Country World Index also closing at an all-time high, as investors extended a global rally fuelled by hopes that the United States and Iran are moving toward a formal end to their conflict.
Japan's Nikkei 225 led the regional move, posting its largest one-day point gain on record. South Korea's Kospi added more than 2 per cent, helped by heavy buying in semiconductor names. South Korea has now overtaken Canada to become the world's seventh-largest equity market by aggregate value, according to data compiled by index providers.
Brent crude held just under $103 a barrel through the Asian session, having retreated from highs above $115 reached during the most intense phase of fighting. Lower energy costs are particularly supportive for net-importer economies in the region, including Japan, South Korea and India.
European indices opened positive but trailed the Asian move. Germany's Dax remains more than 1 per cent below its level on the eve of the Iran war and is essentially flat on the year, while the wider Stoxx 600 is up about 5 per cent year-to-date but still around 2 per cent below its pre-war peak.
Strategists at several large banks have raised year-end targets for major Asian indices over the past week, citing AI capital expenditure, easing energy prices and the prospect of additional yen and won weakness against the dollar as supportive factors. Risks cited include any breakdown in talks between Tehran and Washington and a sharper-than-expected slowdown in Chinese property activity.
Cross-asset volatility has fallen sharply, with the VIX equivalent for the Topix index closing at its lowest level since January and Asian credit-default swap spreads tightening to multi-year lows.