Stocks bounce, oil retreats on Mideast ceasefire hopes
Stocks rose and oil fell Wednesday on news that the United States is seeking a month-long ceasefire in its war against Iran and has sent Iran a 15-point plan for discussion. This raised hopes for the resumption of oil exports from the Persian Gulf.
S&P 500 futures were up 0.9 per cent in Asian morning trading, European futures were up 1.2 per cent and Brent crude futures were down nearly 6.0 per cent at US$98.30 ($A140.47) per barrel.
Stock markets in Australia, South Korea and Japan rose nearly 2.0 percent in morning trading, while gold, which investors sold to book profits after a long rally, rose 1.6 percent.
“The market is making headlines right now,” said Kerry Craig, global market strategist at JP Morgan Asset Management in Melbourne.
“So there’s a positive atmosphere. The challenge is… there are still unknowns about where this is going to go next and whether there’s anything concrete in terms of a ceasefire.”
US President Donald Trump on Tuesday said the US was making progress in talks to end the war, including securing a significant concession from Tehran, while a source confirmed that Washington had sent a 15-point solution proposal to Iran.
Israel’s Channel 12, quoting three sources, said the US wanted a month-long ceasefire to discuss the 15-point plan.
Tehran has denied direct talks took place.
Markets have reacted well, if cautiously, since Monday to rumors that the United States wants to end hostilities, as it is unclear whether there has been much progress on when the Strait of Hormuz will be opened to oil tankers.
The dollar has fallen marginally so far this week and was under slight pressure on Wednesday morning; It bought 158.8 yen and traded at US$1.1620 ($A1.6605) per euro.
Brent crude oil prices have risen 35 per cent since the start of the war and are near US$100 ($A143) a barrel. This level is causing economic hardship for buyers currently paying for jet fuel and diesel in Asia.
Interest rate markets are also squeezed by expectations that central bankers will overreact; While a series of interest rate hikes to rein in inflation are priced in Europe, the UK, Japan and Australia in the coming months, there will be no further interest rate cuts in the US.
In Tokyo trading, benchmark 10-year bond yields fell nearly five basis points to 4.34 percent, and two-year yields fell by a similar margin to 3.875 percent.
When bond prices rise, yields fall.
“For now, the market appears to be one that reacts rather than predicts, and until there is clear alignment on both sides, I expect price action to remain fragile,” said Marc Velan, investment manager at Lucerne Asset Management in Singapore.
“People are completely headline-focused and reluctant to pursue moves that could quickly reverse.”
On the ground, attacks by the United States, Israel and Iran continued, and sources said Washington was preparing to send more troops to the region.
The United States is expected to send thousands of troops from the Army’s elite 82nd Airborne Division to the Middle East, two people familiar with the matter told Reuters on Tuesday.
The Australian dollar remained around 70 US cents after inflation data for February, before the outbreak of war, was slightly colder than expected.
War concerns have also overshadowed growing concerns in credit markets, where there are signs of stress in private loans, and Ares Management on Tuesday became the latest asset manager to limit withdrawals from a private debt fund, spooking investors.
Shares of Ares, which manages approximately US$623 billion ($890 billion) in assets by the end of 2025, fell 1.0 percent on Tuesday. They are down 36 percent so far this year.
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