(April 1): US stocks pushed higher as optimism grew that the war in the Middle East is nearing a conclusion on Wednesday, pulling Brent briefly below US$100 ($128.25) a barrel and lifting bonds. The dollar posted its biggest drop in a week.
The S&P 500 is poised to add 0.9% to its biggest daily advance since May, driven by US President Donald Trump saying he foresaw the US ending the war with Iran within two to three weeks. European stocks jumped 2.6%, alongside a 4.9% surge in Asian shares.
Brent fell 5.4% before paring the move as the Strait of Hormuz remained largely closed and attacks continued across the Gulf. Traders trimmed bets on tighter monetary policy, sending two-year Treasury yields three basis points lower to 3.76%. Comparable UK gilt yields dropped 10 basis points to 4.30%.
Traders said it would take time for oil flows to return to normal even if the war ends within Trump’s time frame, especially given the damage to some energy facilities. Trump’s team has also suggested that reopening the Hormuz strait, which carries 20% of global crude, may not be necessary to end the hostilities.
“The correlation between Brent oil prices and global equity markets has been exceptionally strong since the conflict started,” said Wolf von Rotberg, an equity strategist at Bank J Safra Sarasin. “This goes to show that a return to previous equity market highs would need the Strait of Hormuz to reopen and oil prices to drop significantly. It is probably too early for an all-clear yet.”
See also: Stock futures, bonds advance on Trump war report
Trump, who will give an address at 9pm Eastern time to provide an “important update” on Iran, said the Islamic Republic could still reach a deal with the US. He added, however, that an agreement with Tehran isn’t a prerequisite to conclude the war.
“We are seeing a relief rally, and with more information we may see a reversal, so we just need to be careful here,” Remi Olu-Pitan, the multi-asset growth and income head of Schroders, told Bloomberg TV. “There’s still a lot of volatility, the market is still fragile.”
Chipmakers extended their rebound in pre-market trading, with Sandisk Corp rising 3%. Nike Inc plunged 10% after a gloomy outlook. Miners including AngloGold Ashanti plc and Newmont Corp climbed as gold advanced for a fourth straight day, topping US$4,700 an ounce.
See also: Growth jitters lift Treasuries as stocks bounce
Traders at Goldman Sachs Group Inc and JPMorgan Chase & Co suggested Tuesday’s sharp rebound in US stocks was more about the unwinding of negative positioning by market participants than a shift in sentiment over the war.
“Investors have been counting on a swift off-ramp to war essentially since it began, but I think from a market or global economy perspective it’s important to define what the true clearing event to revisit risk and take down recession odds really is,” wrote JPMorgan industrials sector specialist sales Paige Hanson.
While Trump has called on other nations to take control of the Strait of Hormuz, the United Arab Emirates is so far the only Gulf Arab country that has said it will join a naval force to try to reopen the waterway or provide escorts. Bahrain is working on a United Nations Security Council resolution for such a task.
UK Prime Minister Keir Starmer said his government will coordinate a diplomatic push for the strait’s reopening, affirming Britain’s desire not to be dragged into the military conflict.
“I would expect further volatility in the days to come and the market to oscillate between losses and gains for a few more sessions until we get clarity on how the crisis unfolds,” said Alexandre Baradez, the chief market analyst of IG Markets. “This is likely more a temporary respite than a final game changer.”
Corporate news:
- OpenAI has completed a deal to raise US$122 billion from investors at an US$852 billion valuation, marking the company’s largest funding round to date.
- Microsoft Corp is in exclusive talks with Chevron Corp and investment fund Engine No 1 over a long-term deal that would underpin a giant energy complex in West Texas.
- Anthropic PBC inadvertently released source code for its popular Claude AI agent, raising questions about its operational security and sending developers on a search for clues about the start-up’s plans.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
Some of the main moves in markets:
Stocks
- S&P 500 futures were up 0.9% as of 7.39am New York time on Wednesday
- Nasdaq 100 futures rose 1.1%
- Futures on the Dow Jones Industrial Average rose 0.7%
- The Stoxx Europe 600 rose 2.6%
- The MSCI World Index rose 1%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.4% to US$1.1603
- The British pound rose 0.7% to US$1.3316
- The Japanese yen rose 0.1% to 158.49 per dollar
Cryptocurrencies
- Bitcoin rose 0.6% to US$68,580.51
- Ether rose 1.4% to US$2,135.1
Bonds
- The yield on 10-year Treasuries declined three basis points to 4.28%
- Germany’s 10-year yield declined five basis points to 2.95%
- Britain’s 10-year yield declined nine basis points to 4.83%
Commodities
- West Texas Intermediate crude fell 2.8% to US$98.52 a barrel
- Spot gold rose 1.8% to US$4,753.78 an ounce
Uploaded by Tham Yek Lee
