Stocks gain as Trump extends Iran ceasefire
U.S. stock futures rose and the dollar fluctuated Wednesday after President Donald Trump said he would extend the Iran ceasefire indefinitely; Even though the Strait of Hormuz is still closed, oil is maintaining its recent gains.
Trump’s statement appeared to be one-sided, and it was not yet clear whether Iran or US ally Israel would agree to extend the ceasefire that began two weeks ago.
However, markets welcomed the news as the risk momentum remained intact. S&P futures rose 0.5 percent, while Nasdaq futures gained 0.6 percent in early Asian trading.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.14 percent after hitting a seven-week high in the previous session. Japan’s Nikkei index fell 0.2 percent as traders consolidated recent gains.
After a sharp sell-off in March due to war in the Middle East, markets around the world recovered rapidly in April and returned to pre-war levels as expectations of a peace agreement and ceasefire helped risk sentiment.
“Markets appear to be right to assume that we are past the peak of war uncertainty,” said Matt Simpson, senior market analyst at StoneX.
“Risk is likely to remain buoyant and declines are likely to be welcomed by equity bulls. Closing the Strait of Hormuz is already priced in.”
Trump said the US Navy will continue its blockade of Iran’s ports and coasts. Tehran caused a global energy shock by effectively closing the Strait of Hormuz, through which one fifth of the world’s energy supply passes.
US West Texas Intermediate crude oil futures rose 0.44 per cent to US$90.12 ($A125.61) per barrel. The benchmark contract rose 2.8 percent on Tuesday.
In currencies, the euro was last seen at US$1.1748 (US$A1.6375) in early trading. The yen strengthened slightly at 159.26 per dollar and the pound rose to US$1.3519 ($A1.8843).
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