The diplomatic and market calendars are converging on Thursday. Iran is expected to deliver its formal response to the US war-ending proposal through Pakistani mediators today — the most consequential scheduled event since Secretary of State Rubio declared Operation Epic Fury concluded 24 hours ago. Pakistani Foreign Ministry spokesperson Tahir Andrabi told NPR: “Our hope and expectation is for an agreement sooner rather than later.” Axios reported Thursday morning that there is still a chance Trump could renew military action against Iran ahead of his Beijing trip, currently scheduled for May 14-15 — a reminder that the deal is not done, and the Strait of Hormuz remains closed to the approximately 1,600 vessels stranded in its approaches.
Japan’s market reopened Thursday for the first time since Golden Week and priced in the entire global rally that had accumulated in its absence. The Nikkei 225 advanced 5.58% — the most in more than a year — to close at an all-time record of 62,833.84, briefly breaching 63,000 for the first time in history. The session was a direct confirmation of what was only priced in US, European, and Korean markets while Japan was closed: AMD and Palantir earnings beats, the Iran MOU signal, oil’s two-session decline, and the Nasdaq’s own record close. SoftBank surged 18%. For full Japan analysis including the Bank of Japan’s stagflation trap and USD/JPY intervention mechanics, see the Japan section below. Oil continued its decline — WTI (West Texas Intermediate, the US benchmark) fell 3.52% to $91.73, Brent (the global benchmark) fell 3.34% to $97.93 — the third straight session of losses as markets price in the deal before it is signed. Gold (XAU) rose 1.28% to $4,754.50, continuing a recovery from Monday’s war-era low of $4,524. Silver surged 6.17% to $82.07.
US equities are adding to Wednesday’s records in thin mid-morning trade: S&P 500 +0.2%, Nasdaq +0.6%, Dow Jones roughly flat. Fortinet surged 22% after lifting its full-year billings guidance. McDonald’s gained 3% on a Q1 earnings beat. Datadog continued gaining after Wednesday night’s 29% after-hours surge. Friday’s non-farm payrolls report (April, 49,000 consensus) carries an unconfirmed market signal: InvestingLive reported Thursday morning that Trump “has seen the NFP number and is happy” — language that suggests a potential upside surprise. The signal is unconfirmed but the market is pricing it.
The 68-day sequence — war, blockade, diplomatic maneuvering, and Wednesday’s declarations — now arrives at its most consequential 24 hours. Iran is expected to respond today to the US framework proposal via Pakistani mediators. Pakistani Foreign Ministry spokesperson Tahir Andrabi confirmed the channel is active: “Our hope and expectation is for an agreement sooner rather than later.” The framework, as reported by CNN, would trigger a 30-day period to resolve nuclear demands, unfreeze Iranian assets, and negotiate long-term Hormuz security. Iran reviewing means Iran has not rejected — but it has not agreed. The difference matters to oil traders, shipping insurers, and every government whose economy has been disrupted by the closed strait.
The Axios caution reported Thursday morning is not a contradiction of the peace optimism — it is the realistic parallel track. Trump has preserved the military option throughout the diplomatic process. The Truth Social post on Wednesday — “If they don’t agree, the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before” — was a carrot-and-stick in one message. The stick remains on the table. Axios reporting that military action is “still possible” before the China trip is not a new risk; it is the standing posture that has existed since February 28. What would change it: a positive Iranian response arriving today.
The China trip on May 14-15 functions as a structural deadline that no explicit timetable has provided. Trump will not arrive in Beijing with the Strait of Hormuz closed. Xi Jinping has publicly called for Hormuz to reopen. Iranian FM Araghchi travelled to Beijing Wednesday specifically to coordinate before the summit. A deal before May 14 is not guaranteed — but the incentive structure for all three parties (US, China, Iran) points toward resolution before Trump boards that flight. The consequences of arriving in Beijing with no deal would be significant for Xi’s positioned role as broker and for Trump’s ability to negotiate from perceived strength.
Japan’s Nikkei 225 advanced 5.58% — the largest single-session gain in more than a year — to close at an unprecedented 62,833.84, with an intraday high of 63,091. The session had a precise mechanical explanation: it priced in everything that occurred while Japan was closed for Golden Week. The Nikkei was shut as AMD reported a record quarter, Palantir confirmed its AI revenue acceleration, the Nasdaq closed at record highs, oil began its two-session decline, and Rubio declared Operation Epic Fury concluded. Thursday was the catch-up. SoftBank surged 18%, semiconductor manufacturer Ibiden gained 22%, Sumco Corp rose 19.74%. The broader Topix advanced 3% to 3,840.49, approaching its own record.
The Bank of Japan (BOJ) context complicates the rally. On Monday, the BOJ held its policy rate steady while raising its fiscal year 2026 inflation forecast to 2.8% from 1.9% and simultaneously halving its economic growth forecast to 0.5%. This is the definition of a stagflation trap: inflation too high to cut rates, growth too weak to hike them. Policy is paralysed between two bad options. “The Bank of Japan is stepping back from its tightening schedule since the war started,” AXA Investment Managers’ Chris Iggo told CNBC. The result: the yen has been under sustained pressure, with USD/JPY hitting above 160 in late April before Japan’s Ministry of Finance (MoF) intervened on April 30, spending an estimated $35 billion (5.48 trillion yen) in yen-buying — the first intervention since 2024. USD/JPY has since pulled back to the 155-156 range. US Treasury Secretary Scott Bessent is scheduled to meet Japanese officials in Tokyo next week, with the weak yen a specific agenda item. Japan remains on the US Treasury’s currency monitoring list, and the intersection of war-era intervention and Bessent’s Tokyo visit sets up a rare bilateral currency dialogue.
South Korea’s KOSPI fell 0.68% Thursday — a modest consolidation after Wednesday’s historic +6.45% session that took Samsung Electronics past $1 trillion in market capitalisation. Hang Seng gained 1.47%, Shanghai Composite +0.38%. Europe closed with muted gains: the DAX advanced 0.3% to ~24,990 (third straight session of gains, following Wednesday’s confirmed +2.12% close at 24,919). The Stoxx 600 added 0.1%. Rheinmetall fell over 3% as defence stocks rotate out on de-escalation — a direct capital flows confirmation that the war premium is unwinding sector by sector. L’Oréal surged 9% — its best session since November 2008 — on fastest quarterly growth in two years. Nokia gained 6.4% on a Q1 beat: operating profit +54% year-on-year, with AI optical networks driving demand.
Brazil’s Ibovespa closed Wednesday at 187,690 (+0.50%), reclaiming a key technical level. The internal bifurcation is the story: Vale jumped 3% on higher iron ore prices as China resumed trading, banks gained, but oil stocks fell sharply — PRIO -4.2%, Petrobras -2.6% — as WTI declined. Brazil is an oil exporter whose market is rising on global risk-on while its energy sector faces structural revenue headwinds from lower crude. Argentina’s MERVAL gained 4.42% Wednesday. Mexico’s IPC rose 1.84%. The Ibovespa’s path to its 199,354 April all-time high depends on the Iran response and Friday’s NFP — the same binary events driving every other major market.
WTI (West Texas Intermediate, the US oil benchmark) fell 3.52% to $91.73 Thursday — the third consecutive session of decline following Tuesday’s -3.88% and Wednesday’s -10.6% crash. Brent (the global crude benchmark) fell 3.34% to $97.93. From WTI’s April 29 peak of $107 to today’s $91.73, the total decline over eight sessions is 14.3%. Goldman Sachs’ Q4 2026 framework: WTI $83, Brent $90. WTI is now $8.73 above Goldman’s Q4 WTI target — a gap that could close in two to three additional sessions if an Iran deal is signed and Hormuz reopening is confirmed. The supply paradox remains: US crude inventories fell 8.1 million barrels last week (API confirmed). The physical supply constraint has not resolved. Goldman’s $83 target prices a deal being completed — not just announced.
Gold’s war-era story is the defining safe-haven paradox of 2026. The metal started Operation Epic Fury at $5,277.96 on February 28. It briefly spiked to $5,423 in early March on the initial geopolitical panic bid. Then it fell — consistently and significantly — through 68 days of active conflict. By Monday May 4, gold had declined to $4,524, its war-era low, more than 14% below where it opened the war and 16.6% below its early-March peak. The mechanism was not complicated: soaring energy costs fueled inflation fears, which reinforced expectations that central banks would keep interest rates elevated or tighten further. Gold, which is non-yielding, loses its relative appeal in high-rate environments. The geopolitical fear bid was repeatedly overwhelmed by the inflation-rate-hike fear bid. Morgan Stanley confirmed the dynamic explicitly, noting “gold showed signs of its safe-haven status faltering amid the Iranian conflict, as energy shocks heightened inflation expectations.”
Now the war is de-escalating and the mechanism is reversing. Oil falling → inflation expectations decline → rate cut timeline reinstates → gold’s non-yielding disadvantage shrinks → gold rallies. From Monday’s $4,524 low, gold has gained approximately $230 in three sessions — +5.1%. Thursday’s $4,754.50 puts gold 10% below the February 28 war-start price of $5,277 and 12.4% below the early-March peak. Key resistance is $4,800. A decisive break above that level opens the path toward institutional targets — Morgan Stanley sees $5,200 by year-end 2026, and a Reuters survey of 31 analysts produced a revised average forecast of $4,916 for 2026. NFP Friday is gold’s immediate catalyst: a soft 49K print strengthens rate-cut probability and pushes gold toward $4,800. A strong beat delays rate cut expectations and could stall gold’s recovery. Silver’s 6.17% gain to $82.07 — outperforming gold by nearly 5 percentage points — signals that risk appetite for physical precious metals is broadening beyond gold, typically a constructive signal for the complex.
The capital rotation that began with Wednesday’s Iran MOU signal is continuing in a more measured way Thursday. The dramatic single-session moves are compressing into directional drift — the market is now in a pricing regime that assumes the deal happens, rather than one that is repricing the probability of the deal. Within that regime, specific flows are becoming more defined.
US equities are extending Wednesday’s records in low-volume mid-morning trade. The S&P 500 is up 0.2% at a fresh ATH and the Nasdaq is up 0.6%, with the Dow roughly flat as energy stocks offset tech gains. Volume is muted — the market is in a watching position ahead of Iran’s response and Friday’s NFP. The S&P 500’s first-quarter earnings growth is tracking 27.1%, the highest quarterly growth rate since Q4 2021. 84% of reporters beat EPS estimates by an aggregate 20.7%. The war disrupted the macro backdrop but not the corporate earnings cycle.
Fortinet surged 22% after lifting its full-year billings guidance. Cybersecurity billings held strong throughout the war era — geopolitical risk drove enterprise security spend higher and the company is raising the full-year target as that demand proves durable. McDonald’s gained 3% after reporting Q1 adjusted EPS of $2.83, beating the $2.74 consensus. Revenue of $6.52 billion beat the $6.47 billion estimate. The consumer held through the war’s inflation shock at the quick-service level — the result signals that lower-income consumer spending has not broken despite fuel costs. Datadog is continuing gains Thursday after Wednesday night’s 29% after-hours surge on Q1 beat and full-year guidance raise — cloud security demand accelerating as AI workloads scale. AMD is holding near Wednesday’s record close of $421.39 following last week’s two-day combination of Tuesday night’s +15% AH and Wednesday’s +18.6% close-to-close session. The stock hit a 52-week high of $432.49 intraday Wednesday.
Bitcoin is trading near $82,000 Thursday, continuing to test the 200-day exponential moving average (EMA) at $82,228 — the key technical level that defines the boundary between sustained recovery and further consolidation. BTC briefly crossed the 200-day EMA on Wednesday when it hit $82,305, but pulled back into the session. Three on-chain signals are aligned pointing toward a potential $85,000 move: exchange reserves at a seven-year low (coins leaving exchanges signal long-term holding, not selling), 70% of circulating supply held for more than one year (structural accumulation), and daily exchange inflows running below historical averages. Bitcoin dominance has crossed 60%, confirming institutional preference for BTC over altcoins in the current regime.
BTC ETF flows remain the institutional conviction indicator. Daily inflows of $532 million on May 4 mark the third consecutive day of positive flows, with April’s total reaching $4.07 billion. CoinShares tracked $1.2 billion of inflows into digital asset products over the past week — the fourth consecutive week of net positive flow. 75% of surveyed institutions view Bitcoin as undervalued at current levels. 21Shares Chief Investment Officer Adrian Fritz said Bitcoin may tag $100,000 this year despite the current sub-$83,000 range. Consensus Miami 2026 is on Day 3 Thursday — the industry’s largest annual gathering, with live coverage on CoinDesk. Kraken is acquiring Hong Kong-based stablecoin payments firm Reap Technologies for $600 million (Bloomberg), expanding crypto into payments infrastructure. BNY — the world’s largest custody bank — expanded crypto services in Abu Dhabi. The CLARITY Act, which divides crypto regulatory authority between the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) based on asset classification, is expected to receive a Senate Banking Committee markup the week of May 11 when the Senate returns.
This morning’s labor data delivered two readings that pull in different directions. Initial jobless claims for the week ended May 2 came in at 200,000 — below the 206,000 Dow Jones consensus estimate, a beat confirming the labor market absorbed the full blockade period without meaningful deterioration. Continuing claims fell 10,000 to 1.77 million. Both are constructive. Then unit labor costs: +2.3% in Q1, against a 1.6% estimate. Unit labor costs measure hourly compensation minus productivity — when they beat to the upside, it means wages are rising faster than workers are becoming more productive, which is an inflationary signal. Productivity itself rose 0.8%, below the 1.1% estimate. Together: a labor market that is holding (claims beat) but generating inflationary wage pressure (labor costs beat). This is exactly the dual-mandate tension that has kept the Fed on hold.
Friday’s NFP April report carries a specific market signal. InvestingLive reported Thursday morning that Trump “has seen the NFP number and is happy” — unconfirmed, but the language suggests a potential upside surprise above the 49,000 consensus. The war-ending context changes the NFP read significantly. A 49,000 print in an environment where the war is declared concluded and oil is at $91 reads as “labor held through the energy shock.” A beat above 100,000 reads as “the war’s inflationary disruption to hiring was overstated.” Watch unemployment rate and average hourly earnings as the secondary signals — wages beat alongside claims beat would amplify the unit labor cost concern.