(April 3): Asian stocks advanced at the end of another volatile week fuelled by the Middle East conflict. Trading is set to be muted with a number of regional markets shut for holidays.
MSCI’s benchmark Asia Pacific Index gained as much as 1% after the S&P 500 Index reversed an earlier loss of 1.5% to close 0.1% higher. Stocks rallied after oil prices eased off their highs following a report that Iran is drafting a protocol with Oman to monitor traffic through the Strait of Hormuz, having effectively shut it down since the start of the war.
“The improvement in US risk appetite has spilled over” into regional equities, said Hitoshi Asaoka, chief strategist at Asset Management One Co in Tokyo. “While oil prices may not fully return to previous levels, if they do partially normalise, there is considerable room for a rebound from a liquidity perspective.”
The dollar was mixed against its major peers, while Treasury futures were little changed in Asia with the cash market shut until US hours for a half day of trading.
Asian markets closed Friday include Australia, New Zealand, Hong Kong, Singapore, the Philippines and Indonesia. US stock markets will be shut for a holiday for Good Friday, though the government is still scheduled to publish a slate of economic data, including the March nonfarm payrolls report.
US stocks started off Thursday deep in the red after a speech from Trump late Wednesday did little to reassure investors that the war in the Middle East was nearing a swift resolution, though he has previously set a two-to-three-week timeline for ending the conflict. On Thursday, the president issued fresh threats on Iranian infrastructure in a bid to pressure Tehran in negotiations.
See also: Stocks and bonds tumble as US crude hits US$110
“The upshot is that markets remain uncertain as to how long the acute disruptions we are seeing to global energy supplies will persist,” James McCann, a senior economist at Edward Jones wrote in a note. “Against this backdrop, sentiment will likely remain headline-driven in coming sessions, with volatility likely to remain elevated over the short term at least.”
Oil rallied above US$110 a barrel Thursday after Trump vowed an escalation in the war in Iran over the coming weeks. West Texas Intermediate surged 11%, while the global Brent benchmark settled near US$109. Europe’s diesel futures benchmark climbed above US$200 a barrel for the first time since 2022.
War pattern
See also: World stocks and bonds charge higher as oil slides
The higher close for the S&P 500 on Thursday ran counter to a pattern of late-week selloffs that have hit the market ever since the war began, as nervous investors unwind positions that could be upended if weekend developments threaten to worsen the hit to the global economy.
“While assets gyrate on every new headline, until a clear agreement is achieved with a palatable plan for reopening the Strait, there’ll be downward pressure on economic growth and upward pressure on headline inflation,” said Max Gokhman, deputy CIO, Franklin Templeton Investment Solutions. “That spells indigestion for both equity and bond investors.”
Tesla Inc shares fell after the company posted one of its worst sales quarters in years, missing Wall Street’s expectations, as it struggles to turn around its core business and navigate an increasingly challenged electric-vehicle market.
US labour-market data on Thursday gave mixed signals. A report from Challenger, Gray & Christmas Inc showed a 25% increase in job-cut announcements in March from the previous month. Meanwhile, initial jobless claims unexpectedly fell in the week through March 28.
Corporate news:
- A group of private credit firms led by Blackstone Inc has refused to extend another lifeline to software company Medallia, amping up pressure on owner Thoma Bravo to inject more equity into the troubled business or hand over the keys via a debt restructuring.
- Stellantis NV is discussing options for building electric vehicles in Canada with its Chinese partner, Zhejiang Leapmotor Technology Co, according to people familiar with the matter.
- Alibaba Group Holding Ltd has released its third proprietary AI model in as many days, reinforcing the company’s intent to focus on profiting off its flagship artificial intelligence services.
Some of the main moves in markets:
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Stocks
- S&P 500 futures were little changed as of 10.19am Tokyo time
- Hang Seng futures rose 0.6%
- Nikkei 225 futures (OSE) rose 1.6%
- S&P/ASX 200 futures were little changed
- Japan’s Topix rose 1.1%
- The Shanghai Composite fell 0.7%
Currencies
- The euro was unchanged at US$1.1539
- The Japanese yen was unchanged at 159.60 per dollar
- The offshore yuan was little changed at 6.8880 per dollar
Cryptocurrencies
- Bitcoin fell 0.3% to US$66,763.51
- Ether fell 0.7% to US$2,052.79
Uploaded by Chng Shear Lane
