Stocks rise, oil pares gain after report of ceasefire talks between US, Iran

STOCKS rose and crude oil pared gains on Monday (Apr 6) as investors cautiously returned to equities, encouraged by indications the Iran-US conflict may be contained.

Benchmark stock indexes in Japan and South Korea both gained more than 1 per cent, helping boost the MSCI Asia Pacific Index by 0.5 per cent. Two shares advanced for every one that declined in that benchmark, with technology shares outperforming. Futures contracts for the S&P 500 Index erased earlier losses to rise 0.3 per cent.

Aiding sentiment was a media report that the US, Iran and a group of regional mediators are discussing the terms for a potential 45-day ceasefire that may lead to a permanent end to the war. Other reports over the weekend about tanker movements in the Strait of Hormuz also helped.

“Asian markets in particular tend to react quickly to any sign that worst-case scenarios, like a full disruption of oil flows, might be avoided,” said Tareck Horchani, head of sales trading prime brokerage at Maybank Securities. “That’s why you’re seeing a modest rebound, especially in sectors like semiconductors and cyclicals.”

Traders are seizing on any headlines that may affect sentiment after the Iran war darkened the outlook and stoked inflation concerns, roiling expectations for the US Federal Reserve to cut interest-rate cuts. Attention remains firmly on energy prices and the closure of the Strait of Hormuz, a key artery for Middle East oil flows.

“The prediction game remains quite tricky for investors,” said Homin Lee, a strategist at Lombard Odier in Singapore. “Investors’ focus will squarely be on military actions on both sides of the Persian Gulf and whether or not Hormuz vessel crossings can improve further despite these attacks.”

Traders will watch for the impact of the surge in crude oil when monthly US inflation data are released on Friday. The roughly US$1-per-gallon increase in US gasoline pump prices probably drove the March consumer price index up 1 per cent, the most since the post-pandemic inflation surge in 2022, according to an economist survey before the report is published.

In other corners of the market, gold fell 0.5 per cent to about US$4,650 an ounce and silver dropped 0.8 per cent to around US$72 an ounce. Bullion has slumped more than 12 per cent since the conflict began in late February, as spiking energy prices have stoked fears of inflation and reduced the prospects for rate cuts that typically benefit non-yielding precious metals.

Financial markets are shut in a number of Asian economies on Monday, including China and Hong Kong.

SEE ALSO

US, Iran and mediators make push for 45-day ceasefire, Axios reports

Qatar’s LNG tankers idle across Asia as export plant stays shut

South Korea’s president says country must balance risk as Hormuz disruptions threaten oil supplies

US President Donald Trump renewed threats early Sunday to attack Iranian infrastructure if the key energy-shipping route through the Strait of Hormuz remains closed. He followed it later with another that said: “Tuesday, 8:00 P.M. Eastern Time!” with no further explanation.

Meanwhile, Iran’s continued attacks damaged Kuwait’s oil headquarters and shut down an Emirati petrochemicals plant. Fifteen ships have passed through the Strait of Hormuz with permission from Iran, the semi-official Fars news agency reports, citing the latest data on strait traffic.

Trump has previously dialled back his escalation threats, including two weeks ago before markets reopened for the week. Trump also said he plans to hold a news conference at 1 pm New York time on Monday.

“Markets may be running ahead of diplomacy again,” said Charu Chanana, strategist at Saxo Capital Markets in Singapore. “Trump’s language over the weekend had suggested diplomacy was being pushed out the door, so there is still a real risk that markets are pricing the hope of de-escalation faster than the political reality can deliver it.” BLOOMBERG