Stocks rebound as Iran peace talks in focus
Shares in Asia rebounded in early trading on Tuesday as markets were encouraged by reports that Iran is considering joining peace talks with the United States in Pakistan, with new bets that artificial intelligence is supporting demand.
Investors were also watching the Senate confirmation hearing of U.S. President Donald Trump’s nominee to head the Fed, Kevin Warsh, whom Trump has repeatedly criticized for not cutting interest rates sooner and more aggressively.
MSCI’s broadest Asia-Pacific stock index outside Japan rose 0.9 percent, while South Korea’s Kospi index rose 2.1 percent, reaching a record level for the first time since the start of the Iran war.
S&P 500 e-mini futures rose 0.1 per cent, while Brent crude fell 0.4 per cent to US$95.09 ($A132.47) per barrel.
While Japan’s Nikkei 225 index was at 1.2 percent, Australian shares reversed the trend with a loss of 0.3 percent.
The uneasy ceasefire between the US and Iran has frayed as Tehran vowed retaliation after the US announced the seizure of a cargo ship from Iran. Although Iran announced at the weekend that it would skip the second round of talks, a senior official later told Reuters that the country could send delegates to the talks expected to be held in Islamabad.
A separate source speaking to Reuters added to the uncertainty by denying reports that Vice President J.D. Vance was staying in the United States on Monday and traveling to Pakistan for talks.
Renewed tensions had led to an overnight rise in oil prices as traffic in the Strait of Hormuz was largely paralyzed.
“Potential negotiations in Islamabad remain likely, while rhetoric from Washington and Tehran continued to point to fragile and tense negotiations,” analysts from Westpac said in a research report. he wrote.
While the S&P 500 lost 0.2 percent overnight due to concerns about whether the US-Iran ceasefire will continue, the Nasdaq Composite broke its 13-day winning streak, the longest winning streak in more than three decades.
Warsh’s confirmation hearing before the Senate panel is scheduled to begin Tuesday, and his independence from the Trump White House is expected to be the main focus.
While Warsh said in prepared remarks that he was “committed to ensuring that the conduct of monetary policy remains absolutely independent,” economists say his stance on the central bank’s QE program will also be critical.
“In the past, Warsh has been a vocal critic of the Fed’s self-described ‘inflated’ balance sheet, arguing that it has a distorting effect on asset prices,” said Bansi Madhavani, senior economist at ANZ in London. he said.
“His preference for a smaller balance sheet is pretty clear, but we think any guidance he thinks about what the optimal size would be would be relevant,” he said in a podcast.
The US dollar index, which measures the dollar’s strength against a basket of six currencies, remained stable at 98.08, right in the middle of the range it was in last week.
The euro traded at US$1.1782 (A1.6414) while the pound sterling fell slightly on the day to US$1.3522 (A1.8838)5. The risk-sensitive Australian dollar also fell 0.1 per cent to US$0.7171 ($A0.9990) in early trading.
The yield on the US 10-year Treasury bond increased by 0.8 basis points to 4.256 percent.
Bets on the so-called dollar depreciation have weakened. Gold rose 0.1 per cent to US$4,824.83 ($A6,721.60) after moving sideways for a month.
Cryptocurrencies have fluctuated in the trading channel they have been in since early February; Bitcoin was down 0.3 per cent at $76,072.61 ($A105,978.78) and Ethereum was down 0.8 per cent at $2,320.92 ($A3,233.34).
