Opening Bell - Morning Commentary - 07 May 2026

Iran Ceasefire Hopes, AI Momentum Power Markets Higher

The United States and Iran are reportedly nearing a preliminary agreement to end hostilities and resume diplomatic engagement, with Washington expecting Tehran’s response on key issues within 48 hours though officials stress no final deal has been reached. According to news reports, the two sides are close to a memorandum of understanding that would halt the conflict and establish a framework for further negotiations.

President Trump warned that a failure to agree would result in Iran being bombed at a much higher level and intensity than before. Markets responded to the developments  oil prices eased while U.S. and Asian equities rose. 

U.S. equity markets surged to fresh records, driven by optimism over a potential U.S.-Iran memorandum of understanding, momentum in the AI sector, and falling oil prices. The S&P 500 rose 1.46% to 7365, the Dow gained 612 points (1.24%) to 49910, and the Nasdaq climbed over 2% with the Nasdaq 100 touching 28599 reflecting broad market conviction. 

Technology led the rally, with Nvidia surging 5.68% and Microsoft posting notable gains, alongside broader strength in AI and semiconductors. Advanced Micro Devices was the standout performer, jumping over 18% on the back of blowout earnings and strong AI-driven guidance. Underlining the sector’s supply constraints, Micron Technology disclosed that its entire 2026 production capacity for high-bandwidth memory chips is already sold out.

Crude oil futures plunged as diplomatic progress raised prospects of reopening the Strait of Hormuz, pulling Brent crude toward $97 per barrel a significant relief after Middle Eastern conflict had driven retail gas prices above $4.50 per gallon. The fall proved short-lived, however, as oil rebounded amid renewed uncertainty over U.S.-Iran relations. President Trump intensified pressure on Tehran, warning that Iran would be struck “at a much higher level” if it rejected a peace deal, keeping investors on edge as diplomatic developments continued to whipsaw energy markets.

Washington and Beijing are considering launching formal discussions on artificial intelligence, according to reports. AI is also expected to feature prominently during a potential summit next week in Beijing between Donald Trump and Xi Jinping.

In Japan, minutes from the Bank of Japan’s March meeting showed that several board members favoured additional rate hikes if the Iran war-driven energy shock persists and fuels broader inflationary pressures.

The Indian rupee registered its largest single-day gain since April 2, appreciating by 67 paise. The move was supported by a decline in crude oil prices and weakness in the US dollar against major currencies. Central bank intervention and risk-averse sentiment further aided the currency. Markets are increasingly factoring in a potential de-escalation of geopolitical tensions and easing supply constraints, which have weighed on both crude prices and the dollar.

Nifty continued its recent pattern of alternating gains and losses, but yesterday’s move stood out, as it marked a bullish breakout from the consolidation seen over the past seven trading sessions. The rally was broad-based with a strong advance-decline ratio, effectively reclaiming crucial psychological levels for the benchmarks.

Nifty ended the day at 24330, up nearly 300 points. Next resistance for the index is seen at 24600, which is a swing high, while immediate support has shifted higher to 24,000.

Indian markets are likely to open flat on mixed market cues.