Asia markets rally on optimism Iran war could end soon
Stocks and bonds gained ground at the start of the Asian trading session on Wednesday on hopes that tensions in the Iran conflict would ease, while significantly better-than-expected economic data for March led to a rebound in Korean and Japanese stocks.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.7 percent, snapping a four-day losing streak with South Korea’s Kospi rising as much as 5.5 percent.
The Nikkei 225 index also rose 3.9 percent after US President Donald Trump said the US could end military strikes against Iran in two to three weeks and that Tehran did not have to make a deal as a precondition for ending the conflict.
“They’re still pretty far out on what a ceasefire means or what peace means, but the market is embracing the fact that they’re talking,” said Rodrigo Catril, currency strategist at National Australia Bank in Sydney.
“This is a positive sign, at least in terms of signaling or a willingness to end the conflict,” he said while speaking on a podcast.
“Time will tell whether a compromise can be reached. While all this is happening, attacks from both sides continue.”
S&P 500 e-mini futures rose 0.3 percent, while Nasdaq futures gained 0.5 percent as of this writing. Stocks on Wall Street rose on Tuesday as traders bet on a “possible starting point for the war” and the S&P 500 rose 2.9 percent, but oil markets were further subdued as trading resumed in Asia.
Brent crude futures rose 1.1 per cent to US$105.16 ($A152.57) per barrel to claw back some of the previous day’s decline.
South Korean stocks were on track for their sharpest rise in two weeks; While Samsung Electronics gained 8.0 percent and SK Hynix gained 7.8 percent in value, exports increased by 48.3 percent on an annual basis in March, shattering market expectations. A separate purchasing managers’ index (PMI) gauge showed that the country’s factory activity grew at the strongest pace in more than four years in March, driven by semiconductor demand and new product launches.
Business confidence among major manufacturers in Japan improved in the three months through March, according to a closely watched survey released Wednesday; This is a sign that increasing economic uncertainty resulting from the Middle East conflict has not yet dampened morale.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.1 percent to 99.8070 on Tuesday, after recording its biggest one-day decline since March 19.
Fed funds futures are pricing the implied probability of a 25 basis point cut in interest rates at the U.S. central bank’s two-day meeting ending July 29 at 32 percent, according to CME Group’s FedWatch tool.
The yield on the US 10-year Treasury note fell 1.2 basis points to 4.297 percent.
In cryptocurrencies, Bitcoin was down 0.3 per cent at US$67,988.87 (A$A98,638.96), while Ethereum was down 0.2 per cent at US$2,100.94 (A$A3,048.07).
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
