(March 20): Asian equities advanced at the open Friday after US stocks rebounded from session lows and oil retreated amid efforts by leaders of the US and Israel to calm concerns over the Iran war.
The MSCI Asia Pacific Index rose 0.3% after losing 2.6% in the last session, when strikes on energy assets in the Middle East stoked concerns of a prolonged economic impact from the war. S&P 500 futures also gained after the underlying benchmark finished the last session down 0.3%, recovering from a 1% drop. Brent opened lower on Friday. Japanese markets are closed for a holiday, meaning there will be no cash trading in Treasuries during Asian hours.
US stocks pared losses as Israeli Prime Minister Benjamin Netanyahu said the war will end a lot faster than people think as Iran is no longer able to enrich uranium or manufacture ballistic missiles. He also said Israel will no longer target energy infrastructure. President Donald Trump told reporters he’s “not putting troops anywhere” after being asked about the possibility of deploying US ground troops.
Traders are parsing every geopolitical headline for indications on how long the war in Iran will last and whether tensions will continue to escalate from here. Treasury Secretary Scott Bessent noted the US is looking to remove sanctions that it has long imposed on Iranian oil in an effort to lower surging energy prices. The White House doesn’t plan to ban the export of oil and gas, an official said Thursday.
“The market is looking for an off-ramp, the market is looking for a ceasefire,” Bank of America strategist Michael Hartnett said in an interview on Bloomberg Television. Financial conditions have been tightening, but the Federal Reserve finds it tough to address the squeeze if oil prices are high, he added.
Meanwhile, yields on Australian and New Zealand government bonds climbed on Friday as investors in debt markets around the world rushed to bet on higher interest rates amid concerns the surge in oil prices since the war broke out will deliver an inflation shock.
See also: Morgan Stanley says sell Asian stock rally on Iran war impact
UK’s two-year rate jumped as much as 40 basis points to 4.49% after the Bank of England on Thursday said it “stands ready” to act to prevent inflation from accelerating. Treasuries rebounded from their worst point of the session, with the US 10-year yield falling two basis points to 4.25%. However, the policy-sensitive two-year yield rose two basis points to 3.79%.
As the war reduces prospects for a US interest-rate cut in the near term, gold is heading for the biggest weekly loss in six years. The precious metal — widely viewed as a haven — has dropped every week since the US and Israel attacked Iran last month.
Three weeks of conflict have upended the energy supply chain. With the Strait of Hormuz all but closed, gasoline and jet fuel prices are surging, cooking gas shortages are triggering fistfights in India and farmers are fretting about diesel and fertilisers.
See also: Asian stocks slide on Brent surge, BOJ holds rates
In Asia Friday, data set for release includes one-year and five-year loan prime rates in China, export orders for Taiwan and inflation for Hong Kong.
Corporate highlights:
- Micron Technology Inc warned that it will need to spend heavily on production to meet burgeoning demand, overshadowing a generally upbeat forecast.
- Alibaba Group Holding Ltd aims to quintuple cloud and AI revenue to US$100 billion ($127.8 billion) annually in five years.
- One of Eli Lilly & Co’s most highly anticipated experimental medicines helped diabetic patients lose more weight than any drug currently on the market.
- Darden Restaurants Inc raised its full-year outlook as it expects an extra week of promotions at Olive Garden to lift sales.
- Uber Technologies Inc plans to invest as much as US$1.25 billion in Rivian Automotive Inc to help launch a robotaxi fleet that will be available in the US, Canada and Europe over the next five years.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 9.13am Tokyo time
- Hang Seng futures fell 0.6%
- Australia’s S&P/ASX 200 fell 0.3%
- Euro Stoxx 50 futures fell 2.2%
Currencies
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- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to US$1.1575
- The Japanese yen fell 0.2% to 157.98 per dollar
- The offshore yuan was little changed at 6.8831 per dollar
- The Australian dollar was little changed at $0.7082
Cryptocurrencies
- Bitcoin fell 0.6% to US$70,051.81
- Ether was little changed at US$2,145.09
Bonds
- Australia’s 10-year yield advanced one basis point to 4.99%
Commodities
- West Texas Intermediate crude fell 2.2% to US$93.49 a barrel
- Spot gold rose 0.1% to US$4,656.36 an ounce
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