Oil declined, while equities advanced as optimism strengthened around Washington's push to resolve the near month-long Middle East conflict. The dollar edged lower.
Brent crude dipped over 4% to drop below $100 a barrel at the open and shares rose in Japan, South Korea and Australia on hopes for a de-escalation. Equity-index futures for the US gained more than 0.7% as the New York Times reported the US had sent Iran a 15-point plan and Israel's Channel 12 reported that Washington was seeking a one-month ceasefire.
The Bloomberg Dollar Spot Index fell 0.2%, while yields on benchmark 10-year Treasuries dropped two basis points to 4.34%, as easing crude prices tempered inflation risks and reduced the likelihood of higher borrowing costs. Gold rose for a second day to trade around $4,550 an ounce and Bitcoin advanced to about $70,500.
“Crude remains the tip of the spear in this headline-driven market,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “Reports that a potential 30-day ceasefire may be in the works are easing worst-case pricing scenarios and concerns around demand destruction. Details remain limited and headlines are fluid, but signs there may be an off-ramp are reducing some of the risk premium in the market.”
Financial markets have whipsawed since the conflict erupted in late February, with headline-driven swings leaving traders “stopped out” of positions. Sharp volatility in crude is further clouding risk assessment, as surging commodities heighten inflation concerns and raise the prospect that policymakers may keep borrowing costs elevated or even tighten further.
The US sees the “possibility of diplomacy” and President Donald Trump signaled that Iran had offered a “present” as a show of good faith in negotiations, noting it was related to Strait of Hormuz flows. The US and regional mediators are discussing the possibility of holding high-level peace talks as soon as Thursday, but await a response from Tehran, Axios reported.
Trump also said Secretary of State Marco Rubio and Vice President JD Vance alongside special envoys are involved in negotiations. Still, the US is planning to deploy about 3,000 troops from the 82nd Airborne Division to the Middle East, the Wall Street Journal reported.
Even as reports suggested a possible de-escalation, the conflict continued to rage on. Kuwaiti authorities said on Wednesday they were dealing with a fire after drones targeted a fuel tank at the airport, according to the country's aviation regulator. Israel said it had a wave of strikes at targets across Tehran.
ALSO READ: Stock Market Today: All You Need To Know Before Going Into Trade On March 25
Meanwhile, Iran has started charging transit fees on some commercial vessels passing the Strait of Hormuz, people familiar with the matter have said, the latest sign of its control over the most important maritime energy route. Yet Tehran said non-hostile foreign ships are allowed to cross the waterway on its terms.
“It all comes down to the re-opening of the Strait of Hormuz,” said Matt Maley at Miller Tabak. “So, if we hear that ‘good progress is being made' in the negotiations at the end of this week, it won't be enough, if the Strait remains very restricted.”
Private Credit
Aside from the geopolitical risks, Maley also noted that the issues facing the private-credit market are not receding, so brushing these problems aside “is not a good idea.”
Two of the biggest names in private credit, Ares Management Corp. and Apollo Global Management Inc., blocked investors from getting even half of the money they wanted out of their funds, a sign of mounting strain in the $1.8 trillion market.
Any optimism about the war in the Middle East ending without the US first making an attempt to secure and control the Strait of Hormuz, or without first getting more leverage in talks with Iran, still seems misplaced, according to Thierry Wizman at Macquarie Group.
“The longer oil prices stay high, the longer central banks will feel obligated to sound as if they will tighten policy,” he said.
ALSO READ: Wall Street Highlights: S&P 500 Closes Lower As Oil Climbs, Private Credit Woes Mount
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.6% as of 9:02 a.m. Tokyo time
- Hang Seng futures were little changed
- Japan's Topix rose 1.6%
- Australia's S&P/ASX 200 rose 1.4%
- Euro Stoxx 50 futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro was little changed at $1.1617
- The Japanese yen was little changed at 158.65 per dollar
- The offshore yuan was little changed at 6.8927 per dollar
- The Australian dollar was little changed at $0.6994
Cryptocurrencies
- Bitcoin rose 0.7% to $70,526.02
- Ether rose 0.4% to $2,155.7
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.34%
- Australia's 10-year yield declined seven basis points to 4.98%
Commodities
- West Texas Intermediate crude fell 4.3% to $88.36 a barrel
- Spot gold rose 1.6% to $4,545.04 an ounce
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
