Equities Hit Records as Geopolitical Tensions Cool and Oil Dips

Key takeaways

• Risk-on rally driven by easing geopolitics: Cooling US–Iran tensions and lower oil prices have reduced risk premiums, lifting global equities to record highs—led by the S&P 500 and Nasdaq 100.
• AI-led earnings momentum remains dominant: Strong corporate earnings revisions, particularly from mega-cap tech and semiconductor players, continue to fuel the equity rally, underpinned by the ongoing AI infrastructure investment cycle.
• Broad cross-asset impact supports risk sentiment: A softer US dollar, stabilizing yields, and resilient commodity demand (despite oil dipping) are reinforcing bullish conditions, with Asia-Pacific markets and AUD/USD benefiting from improved sentiment.
• Chart of the day: Nikkei 225 bullish acceleration phase remains intact above 60,075 key short-term support. Next intermediate resistances at 62,044 and 62,794/63,138.

Top macro headlines

• US-Iran tensions cool: Diplomatic breakthroughs, highlighted by statements to pause Hormuz operations, indicate an Iran deal may be close. This has reduced the geopolitical risk premium.
• Oil prices retreat: Following the de-escalation of Middle East tensions, crude oil prices have dipped, providing relief to markets, though prices remain structurally supported above the $100 level.
• Record equity highs: The S&P 500 and Nasdaq closed at all-time highs, powered by extraordinary earnings momentum from mega-cap tech stocks and the easing of energy-related headwinds.
• Earnings momentum builds: US corporate earnings are being revised higher into 2026, with the ‘Magnificent Seven’ accounting for a significant portion of expected earnings growth.
• AUD recovered: The Australian dollar recovered from Tuesday, 5 May Asian low of 0.7136 ex-post RBA, supported by RBA’s hawkish monetary policy guidance and resilient risk appetite in equities. AUD/USD is firming up in today’s Asian session (+0.7%) to trade near its 52-week high at 0.7230.

Key macro themes

• AI hardware supercycle: The underlying driver of equity outperformance remains the massive capital expenditure surrounding AI infrastructure, particularly benefiting semiconductor supply chains in Taiwan and South Korea.
• Energy de-escalation: The dipping of oil prices is giving central banks some breathing room, potentially weakening the narrative that sticky energy inflation will force immediate rate hikes.
• Divergent regional recoveries: While the US enjoys robust growth led by tech, Europe faces a more sluggish environment, as evidenced by recent contractions in economic sentiment indicators.

Global markets impact (last 24 hours)

• Equities: Major US indices hit new milestones, with the S&P 500 surpassing 7,230 and the Dow nearing 50,000. Relief from lower oil prices broadened the rally beyond tech into cyclicals.
• Fixed Income: High-yield credit markets saw improved sentiment as risk appetite returned. Sovereign yields stabilized as the immediate threat of energy-driven inflation receded slightly.
• FX: Reducing geopolitical risk premiums put a ceiling on the US dollar strength resurgence. The EUR/USD and GBP/USD rebounded from key near-term supports at 1.1685 and 13490, respectively, after testing these levels on Tuesday, 5 May.
• Commodities: Oil prices dipped on cooling Middle East tensions and paused Hormuz operations, but WTI and Brent remain above $100/bbl. Industrial metals continue to see demand from the AI infrastructure buildout.

Asia Pacific impact

• Stock markets: Regional markets showed a mostly positive response to Wall Street’s record close. The Nikkei 225 futures (Globex) climbed 1.1% to 61,285 (fresh all-time high), and the ASX 200 gained 1%. The China A50 rallied 1.2% to hit almost a 4-year high, while the Hang Seng Index recovered by 0.5%
• Currencies: The AUD/USD remains in a near-term bullish trend as it rose to a new 52-week high of 0.7234, holding above its 20-day moving average at 0.71550.
• Economic outlook: Markets linked heavily to the global semiconductor supply chain (like South Korea and Taiwan) remain the strongest performers in the region, absorbing capital flows driven by the AI boom.

Top 4 events to watch today

1. Eurozone S&P Global Services PMI (final) – 4.00 pm SGT Impact: EUR crosses, DAX
2. UK S&P S&P Global Services PMI (final) – 4.30 pm SGT Impact: GBP crosses, FTSE 100
3. US ADP Nonfarm Employment Change – 8.15 pm SGT: A prelude to this Friday’s non-farm payrolls report (consensus: +99K, Mar: +62K) Impact: USD, S&P 500, US Treasuries
4. US EIA Crude Oil Inventories – 10:30 pm SGT Impact: WTI/Brent Crude

Chart of the day – Nikkei 225 bullish acceleration phase intact

Fig. 1: Japan 225 CFD index minor trend as of 6 May 2026 (Source: TradingView)

The price actions of the Japan 225 CFD index (a proxy of the Nikkei 225 futures) surged to a fresh all-time high of 61,405 at this time of writing.

Its short-term uptrend phase remains intact, supported by price actions that continue to oscillate within an ascending channel since the March 30, 2026, low, and the hourly RSI momentum indicator is in an overbought region (above the 70 level) without any bearish divergence conditions.

Watch the 60,075 key short-term pivotal support to maintain the bullish bias for the next intermediate resistances to come in at 62,044 and 62,794/63,138 (see Fig. 1).

On the other hand, a break and an hourly close below 60,075 would negate the bullish tone, leading to a corrective slide and exposing the next intermediate support at 59,050/58,545 (also the 50-day moving average).