Stocks Rise, Oil Falls on Optimism for Iran Deal: Markets Wrap

(Bloomberg) — Stocks rose and oil declined after President Donald Trump signaled a willingness to resume talks with Iran, boosting expectations for a potential deal that will ease tensions in the Middle East.

The MSCI All Country World Index climbed 0.4%, heading for an eighth day of gains that would be its longest winning streak since September. Asian shares followed Wall Street higher, with the regional benchmark rising 1.7% on optimism that easing tensions will lower oil prices and support economic growth. Technology stocks led gains.

Brent crude fell 1.3% to $98.07 a barrel on signs Washington and Tehran may revive peace talks even after the start of a US blockade of the Strait of Hormuz. The dollar weakened against most of its Group-of-10 peers, while Treasuries edged higher as lower oil prices eased inflation concerns.

Stocks are rallying as investors focused on signs that US-Iran talks are ongoing and may gain traction, lifting confidence in a potential deal despite the blockade of the Strait of Hormuz. The US decision to blockade the waterway is also seen as a targeted measure to curb Iran’s oil revenues, while paving the way for securing shipping routes, reinforcing expectations that energy flows may eventually resume.

“Markets are reacting to the path to peace, not the conflict itself,” said Ritesh Ganeriwal, head of investment at Syfe Pte in Singapore. “As soon as there was a credible de-escalation, markets looked through the risk.”

Trump ordered the blockade of the Strait of Hormuz after negotiations in Islamabad over the weekend had failed to produce any deal. Even amid the latest escalation, the US and Iran are discussing another round of talks, according to people familiar with the matter. The goal is to hold fresh discussions before a two-week ceasefire announced April 7 expires next week, they said.

“Risk assets just want to rally from here,” said Damien Loh, chief investment officer at Ericsenz Capital. “Barring a total collapse in talks the pain trade is for risk assets to rally from here.”

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 climbed to about $74,400. Copper rose to the highest level in more than a month.

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% in Tokyo. Taiwan’s Taiex Index rose to a record as investors returned to the AI theme — seen as less impacted by the war in Iran. South Korea’s Kospi, 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.

“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.

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 12:59 p.m. Tokyo time Nikkei 225 futures (OSE) rose 2.5% Japan’s Topix rose 0.8% Australia’s S&P/ASX 200 rose 0.4% Hong Kong’s Hang Seng rose 0.4% The Shanghai Composite rose 0.5% Euro Stoxx 50 futures rose 0.4% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1768 The Japanese yen rose 0.2% to 159.08 per dollar The offshore yuan was little changed at 6.8151 per dollar Cryptocurrencies

Bitcoin rose 1.7% to $74,461.7 Ether rose 5% to $2,366.14 Bonds

The yield on 10-year Treasuries declined one basis point to 4.28% Japan’s 10-year yield declined three basis points to 2.435% Australia’s 10-year yield declined nine basis points to 4.93% Commodities

West Texas Intermediate crude fell 2.1% to $96.95 a barrel Spot gold rose 0.6% to $4,770.09 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Bernadette Toh, Momoka Yokoyama and Ruth Carson.

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