(May 4): Asian shares traded near record highs on Monday as stronger-than-expected corporate earnings from technology companies kept the sector buoyant, while oil fluctuated amid mixed signals from the Middle East.
MSCI’s Asian equities gauge climbed 1.5% to near its all-time high set on Feb 27, which was just before the US-Israel war on Iran began. Benchmark indices in South Korea and Taiwan both jumped more than 3% to records in a revival of the artificial intelligence (AI) trade. Futures for the S&P 500 and the Nasdaq 100 rose after the Wall Street gauges closed at new highs last Friday on earnings from megacap tech companies including Apple Inc.
Markets opened on an optimistic note after President Donald Trump said the US will begin guiding ships not involved in the Iran conflict through the Strait of Hormuz from Monday. However, a senior Iranian official warned that Tehran would consider any US interference in the Strait a ceasefire breach, according to an AFP report.
Brent crude whipsawed — initially falling 2.4%, then erasing those losses before trading little changed at about US$108 ($137.60) a barrel.
“The devil is always in the detail, but is a positive signal as it shows both parties are willing to find common ground,” said Rodrigo Catril, a strategist at National Australia Bank Ltd in Sydney. Whether the positive sentiment lasts “is hard to tell. We have been here before,” he said.
Elsewhere, the dollar edged lower against most of its major peers. The yen was little changed at 157.01 per dollar after Japan reportedly intervened in the market last Thursday. There’s no cash trading of US Treasuries until New York opens due to holidays in Tokyo and London.
See also: Stocks steady on earnings boost as oil erases jump
The latest headlines add to the month-long surge in equities as traders mostly set aside concerns about the economic fallout from the Middle East hostilities, with signs of corporate resilience driving US stocks to their best month since 2020. Efforts to turn a fragile ceasefire into lasting peace combined and signs of US economic strength sent the S&P 500 to its fifth consecutive week of gains.
Trump described discussions with Tehran as “very positive” after it received Washington’s response to its latest proposal to end the war. Steps to guide neutral ships out through the Strait of Hormuz could pave the way for smoother energy flows from the Middle East after a near-full blockade for two months.
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Iran’s proposal called for a complete end to the conflict within 30 days along with guarantees against renewed strikes, the semi-official Tasnim News Agency reported. The plan reiterated Tehran’s earlier demands, including that US forces withdraw from near Iran, a maritime blockade be lifted, sanctions removed and reparations paid, it said.
On Sunday, Iran said it received the US response to its plan via Pakistan, and is reviewing it.
“Trump fatigue is setting in more and more — I don’t think the market’s really taking it seriously,” said Haris Khurshid, the chief investment officer of Karobaar Capital LP.
The S&P 500 ended April at highs with about 81% of the benchmark’s companies having beat first-quarter earnings estimates, according to data compiled by Bloomberg. Emerging market equities notched a fresh record high toward the end of April while a gauge of Asian stocks have almost recouped their war-driven losses.
Risk-taking went beyond equities, with high-yield credit spreads near multi-year tights and retail traders piling into prediction markets and zero-day options. The rally has held through the war in Iran, oil above US$100 a barrel and a US Federal Reserve that has signalled rates will stay higher for longer amid elevated energy costs.
“The market is being very patient with this level of uncertainty because it is focused on the other side of the conflict, which may be too optimistic,” said Joe Gilbert, a portfolio manager at Integrity Asset Management. “The economic damage being done will be more materially felt in the next month.”
Corporate news:
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- GameStop Corp will offer US$125 in cash and stock per eBay Inc share in a takeover proposal valued at about US$56 billion, The Wall Street Journal reported, citing an interview with GameStop chief executive Ryan Cohen.
- National Australia Bank missed first-half profit estimates as higher software costs and the deteriorating economy pushed up credit provisions, offsetting robust loan growth.
- China ordered companies in the country not to comply with US sanctions on five domestic refiners linked to the Iranian oil trade, deploying a blocking measure introduced in 2021 that was aimed at protecting its firms from foreign laws it deemed unjustified.
- Thyssenkrupp AG said it and Jindal Steel International agreed to pause talks about the Indian company acquiring a stake in its steel unit.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 10.48am Tokyo time on Monday
- Nikkei 225 futures (OSE) rose 0.7%
- Australia’s S&P/ASX 200 fell 0.1%
- Hong Kong’s Hang Seng rose 1.7%
- Euro Stoxx 50 futures rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1724
- The Japanese yen was little changed at 157.03 per dollar
- The offshore yuan was little changed at 6.8261 per dollar
Cryptocurrencies
- Bitcoin was little changed at US$78,848.17
- Ether was little changed at US$2,328.88
Bonds
- Australia’s 10-year yield declined three basis points to 4.99%
Commodities
- West Texas Intermediate crude fell 0.2% to US$101.77 a barrel
- Spot gold fell 0.2% to US$4,602.91 an ounce
Uploaded by Tham Yek Lee
