(April 2): Stocks extended their losses and oil advanced after President Donald Trump said the US would hit Iran extremely hard over the next two to three weeks, damping hopes for a swift resolution to the conflict.
Asian shares fell 0.9% and US equity-index futures fell 0.8%. Treasury yields rose over three basis points. Brent crude jumped 4% to over US$105 a barrel as Trump said the attacks will bring Iran back to stone age. Trump said if there’s no deal with Iran, the US will hit electricity plants.
“We have not hit their oil, even though that’s the easiest target of all, because it would not give them even a small chance of survival or rebuilding,” Trump said.
The conflict in the Middle East has roiled financial markets and pushed several equity gauges into correction territory over the past five weeks. In the runup to the speech, investor confidence had been building that a US scaling back of military action against Iran would help ease geopolitical tensions.
Trump’s rare prime-time address came even as the Strait of Hormuz remained largely closed.
Hours ahead of the speech, the Iranian president took the unusual step of issuing a letter addressed to Americans, arguing that his country has no enmity with the US and has acted in self-defence. He warned that “continuing along the path of confrontation is more costly and futile than ever before” and noted that attacks on infrastructure directly target the Iranian people.
See also: World stocks and bonds charge higher as oil slides
Earlier, Trump said that Iran has asked for a ceasefire, adding that the US would only consider it if the Strait of Hormuz was reopened. Iran’s foreign ministry said the claim of a ceasefire request was “false and baseless”, according to state TV.
The latest back-and-forth follows separate comments from Trump on Tuesday when the president said he foresaw the US ending the conflict within two to three weeks, sparking a sharp rally in stocks.
Elsewhere, tariff concerns resurfaced as the Trump administration prepares a 25% levy on finished goods made with imported steel and aluminium, according to the Wall Street Journal.
See also: Stock futures, bonds advance on Trump war report
In corporate news, KKR & Co’s non-traded business development company KKR FS Income Trust, a type of private credit fund for retail investors, curbed redemptions after receiving an increase in such requests, according to a shareholder letter.
Meanwhile, some investors said it would take time for oil flows to return to normal even if the war ends within Trump’s timeframe, especially given the damage to some energy facilities. Trump’s team has also suggested that reopening the strait, which carries 20% of global crude, may not be necessary to end the hostilities.
“Each passing week increases the global economic costs of the Iran conflict,” wrote Tiffany Wilding, economist at Pacific Investment Management Co. At some point, “the economic effects of persistent disruptions will start to build, with recessionary implications for the global economy.”
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 10.09am Tokyo time
- Hang Seng futures were little changed
- Nikkei 225 futures (OSE) fell 0.2%
- Japan’s Topix rose 0.5%
- Australia’s S&P/ASX 200 rose 0.2%
- Euro Stoxx 50 futures fell 0.2%
Currencies
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1587
- The Japanese yen was little changed at 158.81 per dollar
- The offshore yuan was little changed at 6.8786 per dollar
Cryptocurrencies
- Bitcoin was little changed at US$68,217.1
- Ether rose 0.1% to US$2,146.23
Bonds
- The yield on 10-year Treasuries advanced one basis point to 4.33%
- Japan’s 10-year yield was little changed at 2.305%
- Australia’s 10-year yield advanced six basis points to 4.97%
Commodities
- West Texas Intermediate crude fell 0.1% to US$100.01 a barrel
- Spot gold fell 0.3% to US$4,745.15 an ounce
Uploaded by Chng Shear Lane
