Global stocks hit highs as US-Iran war tensions ease

• More than 80% of companies reporting Q1 earnings have beaten analyst expectations, with Bank of America and Morgan Stanley leading bank sector strength
• China's Q1 GDP grew 5.0%, exceeding the 4.8% forecast and hitting the upper end of its 4.5-5.0% annual target range despite mixed retail and industrial data
• The US dollar weakened for an eighth consecutive session to six-week lows as safe-haven demand faded, while oil held below $100 with Brent at $96 and WTI at $92

Summary

Market Rally Driven by Easing Geopolitical Tensions

Global equity markets reached record highs on April 16, 2026, as US-Iran tensions eased after six weeks of volatility. MSCI's all-country index hit new peaks, while Japan's Nikkei surged 2.5% and South Korea's KOSPI gained over 2% to record closes. The rally reflects renewed investor confidence following signals of potential US-Iran peace talks, with a Pakistani mediator reportedly arriving in Tehran.

Strong Corporate Earnings Fuel Momentum

Robust Q1 earnings underpinned the rally, with over 80% of reporting companies beating analyst forecasts. Bank of America and Morgan Stanley exceeded expectations, lifting major US indices to fresh highs Wednesday. Taiwan Semiconductor Manufacturing Company also delivered another earnings beat, boosting sentiment around technology and global growth prospects.

Commodity and Currency Movements

Oil prices stabilized below $100 per barrel despite Thursday gains, with Brent trading around $96 and WTI near $92. Reports suggesting Iran may allow ship passage through the Omani side of the Strait of Hormuz eased supply concerns. The US dollar weakened to six-week lows, declining for an eighth consecutive session as safe-haven demand faded.

China Outperforms, US Political Uncertainty Persists

China's Q1 GDP growth reached 5.0%, beating the 4.8% forecast and approaching the upper end of its 4.5%-5.0% annual target. However, March retail sales and industrial output showed slower growth. In the US, political focus remains on President Trump's criticism of Fed Chair Jerome Powell and upcoming congressional hearings for Fed Chair nominee Kevin Warsh.

Investment Implications

Analysts recommend buying US bank stocks (BAC, MS) for earnings momentum and TSM for technology sector exposure, though risks include renewed geopolitical shocks or demand weakness.