Asian stock markets have reached record highs as investors become increasingly optimistic about the potential for artificial intelligence (AI) to drive economic growth. The Nikkei 225 in Japan rose 1.4% to a record high, while the Hang Seng index in Hong Kong surged 2.4%.
The optimism was further fuelled by US President Donald Trump's announcement that he has paused 'Project Freedom' to work on a final agreement with Tehran. Trump tweeted that there had been 'great progress' towards a deal, which saw oil prices retreat. Brent crude fell 1.3% to $73.15 a barrel, while West Texas Intermediate (WTI) crude dropped 1.4% to $66.40 a barrel.
Investors are now looking to the US Federal Reserve's meeting next week for further guidance on interest rates. Analysts believe that a rate cut is unlikely, but a dovish statement from the Fed could help to calm market nerves. 'The market is pricing in a 25% chance of a rate cut at the next meeting,' said David Cheetham, market analyst at XTB. 'However, we believe that the Fed will stick to its neutral stance and avoid any surprises.'
The UK's FTSE 100 index rose 0.6% to 7,445.14, while the pound fell 0.2% against the dollar to $1.30. The FTSE 250 index, which is seen as a barometer for the UK economy, rose 0.8% to 19,654.34.
Analysts believe that the optimism over the Iran deal and AI is driving the stock market rally. 'The combination of AI optimism and the Iran deal is creating a perfect storm of positivity for the stock market,' said Neil Wilson, chief market analyst at Markets.com. 'However, we need to be cautious and remember that the market can turn on a dime.'
In other news, UK inflation rose 0.2% in March, while the UK's trade deficit widened to £13.4 billion in the same month. The Office for National Statistics (ONS) reported that the trade deficit was largely driven by a 10% increase in imports of goods.