Relief Rally in Stock Markets as Trump Signals Final Stages of US-Iran Peace Deal

Key Takeaways

• Global markets staged a strong relief rally after US President Donald Trump signalled that a US-Iran peace deal is entering its “final stages,” triggering a sharp unwind in geopolitical risk premiums and sending oil prices down 5%.
• NVIDIA delivered blockbuster Q1 earnings with revenue surging 85% year-over-year to US$81.6 billion, but its share price dropped 1.3% in after-hours trading.
• Federal Reserve policymakers remain concerned about persistent inflation, with the latest Fed minutes showing openness toward potential future rate hikes, even as bond yields temporarily eased from recent multi-decade highs.
• Chart of the day: AUD/USD bearish reaction after retest on 20-day MA, reversing almost all of Wednesday’s gains. 0.7180 key short-term resistance to maintain intraday bearish sentiment on the Aussie.

Top Macro Headlines

• US-Iran peace deal reaches “final stages”: Global risk sentiment shifted drastically after US President Donald Trump announced that the United States and Iran are in the “final stages” of negotiating a peace deal to end the conflict. Trump previously called off a planned retaliatory strike following a new proposal from Tehran, snapping a multi-day market panic.
• NVIDIA destroys expectations with blowout earnings but shares slide 1.3% after-hours: Chip giant NVIDIA reported record-shattering earnings for the April quarter, with sales reaching US$81.6 billion, up 85% year-over-year, and net income more than tripling to US$58.3 billion. The numbers beat analyst expectations across the board, supporting its position as the world’s most valuable publicly listed company at a US$5.5 trillion market cap.
• Fed minutes reveal openness to rate hikes: The newly released minutes from the Federal Reserve’s April policy meeting showed that multiple policymakers remain open to an interest rate hike if inflation proves persistent. The committee all but retired the rate-cut debate as structural price pressures linger ahead of incoming Fed Chair Kevin Warsh taking the helm.
• SpaceX files for massive history-making IPO: Elon Musk’s SpaceX officially filed for its long-awaited initial public offering. Looking to raise tens of billions of dollars, the mid-June listing is on track to eclipse every other blockbuster IPO in history, splitting its rocket-launch, satellite, and nascent AI units.
• Japan reactor makers forecast nuclear resurgence: Following a decade-long lull, Japan’s top reactor manufacturers are projecting record sales amid a major domestic nuclear power resurgence. Concurrently, Tokyo announced plans to unleash green bonds focused heavily on EV batteries and clean technology.

Key Macro Themes

• Geopolitical “risk on” realignment: Energy and capital markets are rapidly pricing out the immediate war premium after weeks of supply disruptions tied to the Strait of Hormuz. The sudden multi-percentage drop in crude highlights a volatile shift from stagflation fears back toward pro-growth assets.
• Bond market pressure limits central bank independence: Despite the single-session relief rally in bonds, long-dated yields remain near multi-decade highs, with the US 30-year yield touching 5.20%. This persistent structural inflation pressure has forced President Trump to cool his aggressive public demands for immediate interest rate cuts from the Fed.
• AI hardware and startup funding dominance: NVIDIA’s stellar US$81.6B print, paired with Anthropic projecting a 130% revenue surge to US$10.9B for its first profitable quarter, demonstrates that the AI infrastructure supercycle shows no signs of structural deceleration. OpenAI is also reported to be preparing a confidential draft prospectus for an upcoming IPO.

Global Market Impact: Last 24 Hours

Equities: Wall Street snapped a three-day losing streak, with the main US indices rallying over 1% on peace deal optimism. Tech, up 2%, and consumer discretionary sectors, up 2.5%, led the charge, while the Philadelphia Semiconductor Index surged 4.5%. Europe and the UK gained 1% and 1.5%, respectively.

Fixed Income: Sovereign bond yields tumbled sharply, marking their biggest single-day decline since late March. The US 10-year Treasury yield fell by 10 basis points, while UK yields posted widespread double-digit drops across the entire curve.

FX: The US Dollar Index, DXY, weakened by 0.2%. The Australian Dollar, New Zealand Dollar, and Swedish Krona emerged as the top G10 gainers on renewed global risk appetite.

Commodities: WTI and Brent crude oil plummeted by 5% as geopolitical premium evaporated on the final-stage peace talks between the US and Iran. Non-yielding spot gold edged slightly higher by 1.4% to US$4,544/oz, bouncing off its recent 1.5-month lows as interest rate anxieties temporarily moderated but remained below its 20-day moving average at US$4,622/oz.

Asia Pacific Impact

• Stock markets: Semiconductor and tech supply chains are expected to gain a strong tailwind today, following NVIDIA’s blowout earnings and Samsung’s union tentatively suspending its strike. Major Asia Pacific benchmark stock indices are trading in positive territory in today’s Asia opening session. Nikkei 225 rose 3.4%, KOSPI surged 6.6%, Hang Seng Index gained 0.5%, China A50 added 0.7%, ASX 200 climbed 1.7%, and STI rose 0.3% at the time of writing.
• Currencies and interventions: Bank Indonesia’s unexpected 0.5% policy interest rate hike successfully lifted the Rupiah, combating multi-month capital outflows. The Japanese Yen stabilized near 159 per USD as Tokyo continued to threaten immediate intervention ahead of the 160 threshold. The Aussie fell 0.5% against the USD, almost reversing all of yesterday’s gains, reinforced by weak labour data as the unemployment rate for April jumped to 4.5% from 4.3% in March.

Top 4 Events to Watch Today

1. Eurozone S&P Global Manufacturing and Services PMI Prelim (May) – 4.00 pm SGT Impact: EUR/USD, EUR crosses, DAX
2. UK S&P Global Manufacturing and Services PMI Prelim (May) – 4.30 pm SGT Impact: GBP/USD, GBP crosses, FTSE 100
3. US Weekly Initial Jobless Claims – 4.30 pm SGT Impact: USD, US stock indices, US Treasuries
4. US S&P Global Manufacturing and Services PMI Prelim (May) – 8.30 pm SGT Impact: USD, US stock indices, US Treasuries, Gold

Chart of the Day: AUD/USD Bearish Reaction at 20-Day MA

Fig. 1: AUD/USD minor uptrend as of 21 May 2026. Source: TradingView.

The price action of AUD/USD exhibited a bearish reaction after a retest of the 20-day moving average. The Aussie fell by 0.4% intraday in today’s Asia session, almost reversing all of the gains seen on Wednesday, 20 May 2026.

Technically speaking, AUD/USD remains entrenched in a minor downtrend phase since its failure to break above 0.7265, the swing highs of 4 May 2022 and 3 June 2022, on three recent occasions: 6 May, 13 May, and 14 May.

Watch the 0.7180 key short-term pivotal resistance to maintain the near-term bearish bias. A break below 0.7085, Tuesday, 19 May 2026 low, exposes the next intermediate supports at 0.7055 and 0.7030 in the first step.

However, a clearance and an hourly close above 0.7180 invalidates the bearish scenario for a squeeze up towards the next intermediate resistances at 0.7233 and 0.7265.