Markets Rally on Hopes of Middle East Peace and Stable Oil Prices

Stocks surged in most emerging markets on Thursday as investors speculated on the possibility of a Middle East peace deal that could stabilize shipping flows and curb oil supply disruptions. This optimism drove MSCI's index tracking equities in developing economies up by 1.2%, nearing its pre-conflict levels.

Israel's cabinet discussed a potential ceasefire with Lebanon, a crucial obstacle in previous negotiations. The prospect of U.S. and Iranian officials engaging in talks in Pakistan as early as this weekend added to investor confidence. Crude oil prices fluctuated between $90 and $100 per barrel amidst reports of Iran's offer to allow unimpeded shipping through the Strait of Hormuz.

China's economy demonstrated robust performance, with GDP growth accelerating to 5.0% in Q1 of 2026, despite higher energy costs affecting global demand. The IMF stated that countries, particularly in sub-Saharan Africa, might seek new loan programs to cope with the impact of the conflict, while Asian energy importers face significant challenges.