Asian Stocks Rise Led by Tech, Oil Drops on Iran: Markets Wrap
(Bloomberg) — Asian stocks advanced as interest in artificial intelligence shares resurfaced, with Middle East tensions appearing to ease after President Donald Trump raised hopes for talks with Iran. Oil fell.
MSCI’s Asia Pacific equity index rose 1.6% on optimism that an easing of the conflict will lower oil prices and support economic growth. Technology stocks led the gains with Taiwan’s Taiex Index rising to a record as investors returned to the AI theme — seen as less impacted by the war in Iran. South Korea, a poster child for AI investments, surged 3.3% as sentiment improved with the S&P 500 Index erasing all losses triggered by the Iran conflict.
Supporting markets, Brent crude fell 1.3% to $98 a barrel on signs Washington and Tehran may revive peace talks following the start of a US blockade of the Strait of Hormuz. The dollar held its losses, while Treasuries edged higher as lower oil prices eased inflation concerns.
Market sentiment is improving, with the MSCI All Country World Index rising for an eighth straight day, after Trump signaled a willingness to resume talks and said Iran had reached out to his administration. Even as the US began a naval blockade of the Strait of Hormuz — a key artery for crude oil flows from the Middle East — and inflation surged in the US, traders remained cautiously optimistic that last week’s ceasefire-driven rally can hold.
“As the Iran deal hopes improve, markets will refocus on earnings growth and AI,” said Ritesh Ganeriwal, head of investment at Syfe Pte in Singapore. “Markets are reacting to the path to peace, not the conflict itself. As soon as there was a credible de-escalation, markets looked through the risk.”
Meanwhile, the US blockade of the Strait of Hormuz took effect, marking Trump’s latest attempt to pressure Iran to loosen its grip on the waterway, a chokepoint through which about a fifth of global oil and liquefied natural gas flows. Since the US action, at least two tankers appear to have abandoned planned transits after a military deadline to exit Iranian waters passed, underscoring the growing disruption to shipping.
In other corners of the market, Treasuries rose with the yield on the 10-year falling one basis point to 4.28% as cheaper oil helps contain inflation. Gold rebounded after two days of losses to trade around $4,775 an ounce, while Bitcoin rose to about $74,400. Copper rose to the highest level in more than a month.
The yuan held steady as China’s export growth slowed sharply in March from previous months, reflecting growing strains on the world’s No. 2 economy as the war in Iran upends global energy supply. The Singapore dollar erased its gains after the country’s central bank tightened its monetary policy settings.
Still, the technology sector led the focus, with MSCI’s Asia Pacific tech gauge jumping 3.8% and companies such as Kioxia Holdings Corp. surging 15%.
“As a path toward normalization starts to come into view, the environment is gradually shifting toward looking beyond the near-term rises in oil prices and focusing more on what lies ahead,” said Ikuo Mitsui, a fund manager at Aizawa Securities Co. “When looking ahead to the end of the war, the key question is which sectors or stocks offer high visibility.”
Traders are also focused on the first-quarter earnings season, which got off to a mixed start on Monday, as they look for an early read on the financial health of corporate America.
Goldman Sachs Group Inc. shares slipped 1.9% following its earnings, while JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. are due to report Tuesday as the Middle East conflict weighs on the outlook.
“Given the economic costs of higher oil prices and with the immediate turn of events highly uncertain, we think investors should avoid attempts to “trade” geopolitics,” wrote Ulrike Hoffmann-Burchardi, CIO Americas and global head of equities at UBS Global Wealth Management.
Meanwhile, HSBC Holdings Plc Chief Executive Officer Georges Elhedery said the conflict in the Middle East and broader “uncertainties” are beginning to dent client confidence as investors navigate an increasingly volatile global landscape.
“We’re saddened and concerned with what’s happening in the Middle East, and we’re concerned not just with what’s happening, but also with how long this will take,” Elhedery said in an interview with Bloomberg Television at an HSBC conference in Hong Kong. “Unfortunately, some of these uncertainties have initially started to weigh on general confidence.”
Corporate Highlights:
United Airlines Holdings Inc.’s CEO floated a possible combination with American Airlines Group Inc., according to people familiar with the conversations. American shares jumped as much as 10% in postmarket trading. Contemporary Amperex Technology Co. Ltd. is considering a share sale to raise as much as $5 billion in Hong Kong after rallying strongly since its May listing in the city, according to people familiar with the matter. Sandisk Corp. shares gained as the memory chipmaker is set to join the Nasdaq 100 index. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 11:59 a.m. Tokyo time Japan’s Topix rose 1% Australia’s S&P/ASX 200 rose 0.6% Hong Kong’s Hang Seng rose 0.5% The Shanghai Composite rose 0.4% Euro Stoxx 50 futures rose 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1761 The Japanese yen rose 0.2% to 159.13 per dollar The offshore yuan was little changed at 6.8164 per dollar Cryptocurrencies
Bitcoin rose 1.6% to $74,374.2 Ether rose 5.1% to $2,368.4 Bonds
The yield on 10-year Treasuries declined one basis point to 4.28% Japan’s 10-year yield declined 1.5 basis points to 2.450% Australia’s 10-year yield declined eight basis points to 4.93% Commodities
West Texas Intermediate crude fell 2% to $97.10 a barrel Spot gold rose 0.7% to $4,774.71 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Bernadette Toh and Momoka Yokoyama.
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