Asian stocks shaky as US-Iran ceasefire tested
Asian shares rose but initial gains were capped as traders questioned the durability of the US-Iran ceasefire and remained wary of fragile hopes for Israel-Lebanon peace talks. I
Investors were on edge as Iran cited Israel’s ongoing attacks on Lebanon as a key sticking point in its deal with the United States
MSCI’s broadest index covering Asia-Pacific shares outside Japan rose 0.5 percent, led by South Korea’s Kospi’s 1.9 percent rise. Japan’s Nikkei 225 was up 1.5 percent, while S&P 500 e-mini futures reversed earlier losses and traded flat.
“The US-Iran ceasefire sparked a sharp recovery in Asian markets but risk appetite was tested yesterday,” said Rupal Agarwal, Asia quant strategist at Bernstein in Singapore.
“We believe this could be the beginning of the end and offers investors an opportunity to focus on pre-war trends and fundamentals,” he said. “We recommend adding back some obsolete names.”
The S&P 500 rose 0.6 percent on Thursday, while the MSCI global equity index posted modest gains after Israeli Prime Minister Benjamin Netanyahu said he wanted direct talks with Beirut on Thursday – a day after the worst bombing of the war killed more than 300 people in Lebanon and jeopardized the US-Iran ceasefire.
Brent crude rose 1 percent to $96.83 a barrel as trading resumed in Asia after Hezbollah fired missiles at Israel, triggering air raid sirens in parts of the country including Tel Aviv.
The Strait of Hormuz was largely closed to maritime traffic on Thursday, with maritime traffic well below 10 percent of normal volume, with Tehran claiming control of the strategic waterway that carries a fifth of global oil and gas shipments.
The closure of the strait during the six-week-long Iran war created shock waves in global markets, with oil prices rising and energy supplies shrinking.
US President Donald Trump weighed in on the issue with a clear warning. In a post on Truth Social, he said Iran was doing a “very bad job” of allowing oil to pass through the strait. “This is not the agreement between us!” He wrote, underlining Washington’s frustration as market negativities intensified.
The US dollar index, which measures the dollar’s strength against a basket of six currencies, rose 0.1 percent to 98.92 after data released on Thursday showed weekly jobless claims rose 16,000 to 219,000 and continuing claims fell 38,000 to 1.794 million, the lowest level since May 2024.
The core PCE price index also increased by 0.4 percent for the second month in a row; This reflects a 3.0 percent annual increase.
The yield on the US 10-year Treasury bond rose 0.6 basis points to 4.285 percent.
Fed fund futures show investors are pushing forward their expectations for the Fed’s next 25 basis point rate cut to April 2027. The implied probability that the U.S. central bank will remain on hold at that month’s meeting fell to 49.6 percent from 64 percent on Thursday, when markets were still trending toward easing later in the year, according to CME Group’s FedWatch tool.
Elsewhere, investors are demanding to withdraw more than 15 per cent of their assets from Carlyle’s flagship private credit range fund, in the latest blow to the embattled private credit asset class, the group said in a shareholder letter published on Thursday.
Bitcoin fell 0.7 percent to $71,903.27, while Ethereum fell 1.0 percent to $2,191.81.
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