Asian Stocks Advance, Crude Oil Pares Declines: Markets Wrap
(Bloomberg) — Asian stocks rebounded from Monday’s selloff and crude oil fell, as President Donald Trump signaled the Iran war may be nearing an end, boosting investor sentiment.
The MSCI Asia Pacific Index rose 2% — after tumbling 3.7% on Monday — with roughly two stocks advancing for every one that declined. A gauge of the region’s technology shares surged 3.5%. Asian equities were off their session highs.
The market gains came as Trump said the war with Iran would resolve “very soon.” The president said that he did not believe the conflict would be over this week, but insisted the operation was ahead of schedule. The US military objectives could be described as “pretty well complete,” he said.
Brent crude fell 4.1% to $94.92 a barrel after earlier sliding as much as 11% before trimming some of those losses. The dollar weakened against all its Group-of-10 peers, while Treasury 10-year yields climbed two basis points to 4.12% after halting a five-day increase on Monday. Gold advanced.
The sharp swings indicate just how sensitive markets have become to headlines from the Middle East conflict. Cross-asset volatility showed little sign of easing — with a market risk indicator hovering near levels seen when Trump unveiled global tariffs last year — as investors grappled with a fast-moving geopolitical conflict that offers no clear trading playbook.
“What we’re seeing now is more of a relief rally after an extreme risk-off episode, rather than a genuine shift back into a full risk-on environment,” said Dilin Wu, a research strategist at Pepperstone Group.
Even so, equity-index futures for US benchmarks slipped in early Asian trading, signaling the rebound may not hold. Contracts for the S&P 500 and the Nasdaq 100 were down 0.3%, having pared losses of as much as 0.6%.
Trump’s comments at press conferences “haven’t been the most informative signal,” so investors would do well to remain skeptical, Eric Van Nostrand, a chief investment officer at Lazard Asset Management, said in a Bloomberg TV interview.
“There’s a lot of misplaced confidence in markets right now that things will ease quickly as they have in previous episodes of elevated Middle Eastern tensions,” he said. “But I do think what we are seeing today, given the likely duration of closure of the Strait of Hormuz, is something quite different. It is going to affect the global economy really in a very meaningful and global way.”
What Bloomberg strategists say…
“The damage to economies goes well beyond the direct fallout from crude prices. Inflation shocks are coming, delivering stagflationary impulses as they weaken demand and push central banks toward more hawkish stances. The outlook for equities is much gloomier now than it was a month ago.”
— Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis.
Crude had a volatile session on Monday that saw the commodity swing in the widest range since prices briefly turned negative during the depths of the pandemic. Oil surged toward $120 a barrel early Monday before pulling back as the world’s largest economies considered an effort to release emergency reserves.
Still, the vital Strait of Hormuz remains effectively closed, which has led to major producers in the Persian Gulf, including Saudi Arabia, curtailing output. The waterway is crucial for the global movement of crude.
Group-of-Seven finance ministers said they were ready to take any steps needed to support energy supply, including releasing strategic oil reserves — although the group isn’t at the point of doing so yet. Meantime, Trump is expected to review a set of options to tame oil prices, including restricting US exports and waiving some federal taxes, Reuters reported.
“We expect markets to stay very short-term focused, volatile and headline-driven as the conflict plays out this week,” said Carol Schleif at BMO Private Wealth.
Corporate Highlights:
Hewlett Packard Enterprise Co. gave an outlook for revenue in the current quarter that exceeded analysts’ estimates, a sign the company is benefiting from solid demand for hardware that helps customers run AI workloads. Apple Inc. increased iPhone production in India by about 53% last year and now makes a quarter of its marquee devices there. Anthropic PBC sued the Defense Department for declaring the AI giant posed a risk to the US supply chain, further ramping up a high-stakes dispute with the Pentagon over safeguards on the company’s technology. Novo Nordisk A/S and Hims & Hers Health Inc. will work together to sell obesity drugs, a sudden reversal after more than eight months of acrimony that culminated in a legal battle. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.5% as of 12:48 p.m. Tokyo time Japan’s Topix rose 1.5% Australia’s S&P/ASX 200 rose 0.8% Hong Kong’s Hang Seng rose 1.6% The Shanghai Composite rose 0.4% Euro Stoxx 50 futures rose 0.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.2% to $1.1608 The Japanese yen fell 0.1% to 157.89 per dollar The offshore yuan was little changed at 6.8912 per dollar Cryptocurrencies
Bitcoin rose 0.8% to $69,537.54 Ether was little changed at $2,025.9 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.12% Japan’s 10-year yield declined two basis points to 2.160% Australia’s 10-year yield declined nine basis points to 4.85% Commodities
West Texas Intermediate crude fell 3.8% to $91.16 a barrel Spot gold rose 0.4% to $5,158.77 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu, Abhishek Vishnoi, Sarah Chen and Jake Lloyd-Smith.
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