Hong Kong stocks hit 2-month high on hopes of Middle East war ending

Optimism that the Middle East hostilities will conclude soon drove Hong Kong equities to a two-month high on Thursday, as the city’s stock market joined a global rally supported by easing oil prices and artificial intelligence-driven enthusiasm.

The Hang Seng Index closed 1.6 per cent higher at 26,626.28, a level last seen on February 27. The Hang Seng Tech Index jumped 3.1 per cent.

On the Chinese mainland, the CSI 300 Index and the Shanghai Composite Index both gained 0.5 per cent.

Media reports emerged that the US had proposed a memorandum of understanding that would reopen the Strait of Hormuz and lift the American blockade of Iranian ports. Detailed negotiations over Iran’s nuclear capability would follow, but nothing had been finalised yet, the reports said. The developments came after US President Donald Trump announced that an operation to escort commercial vessels through the strait would be suspended, with the narrow marine corridor a focus among investors since the war erupted more than two months earlier.

“Reports that the US and Iran are moving towards a framework that could lead to a reopening of the Strait of Hormuz triggered a sharp relief rally across equities, bonds and risk currencies,” said Gary Dugan, CEO of The Global CIO Office. “Markets are beginning to treat de-escalation as disinflationary. That helps equities today.”

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What is Polymarket, the gambling site that lets you bet on almost everything?

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Global stocks started a record-setting run this month on growing expectations about a diplomatic approach to ending the US-Iran war. Oil futures retreated from record highs, reducing fears of stagflation and tightening by central banks. Resilient quarterly earnings from US tech companies also added to the belief that hyperscalers would ramp up investments in AI infrastructure, including computing power and data centres.