Hong Kong (AFP) – Asian stocks fell and oil prices rose Thursday as the United States and Iran appeared no closer to holding fresh peace talks, with Tehran continuing to refuse to reopen the Strait of Hormuz. Hopes that the two would meet for a second round of negotiations in Pakistan have dissipated, with the Islamic republic targeting three container ships in the waterway and citing Washington’s blockade as its reason for keeping it closed. Investors have spent most of the week upbeat that a breakthrough to end the seven-week conflict will be made soon, while healthy earnings and a resumption of the AI trade have also provided support.
Crude prices jumped as much as four percent in early Asian business after global security monitors and Iran’s Revolutionary Guards reported that Iranian forces had seized two ships and fired on a third in the Strait of Hormuz. Tehran has stated that vessels must seek permission to leave or enter the Gulf through the waterway, which in peacetime accounts for around a fifth of the world’s oil and gas exports along with other vital commodities. However, the White House indicated that Donald Trump did not consider the move to be a ceasefire violation, as the vessels involved are not American or Israeli.
Meanwhile, Iran’s parliament speaker stated that the Islamic republic would not reopen the Strait as long as the U.S. naval blockade remained, describing it as a “blatant violation” of the ceasefire between the two countries. “A complete ceasefire only has meaning if it is not violated through a naval blockade… Reopening the Strait of Hormuz is not possible amid a blatant violation of the ceasefire,” speaker Mohammad Bagher Ghalibaf said on X.
Still, Trump’s Press Secretary Karoline Leavitt noted that he “has not set a firm deadline to receive an Iranian proposal” for talks, adding that “ultimately, the timeline will be dictated by the commander in chief.” Oil prices remained elevated, with Brent holding above $100 following a surge Wednesday, although they pared initial gains on Thursday. Most equities fell, with Tokyo, Hong Kong, Shanghai, Sydney, Singapore, and Wellington all experiencing declines. However, Seoul rallied more than one percent to a new record, thanks to a fresh rally in the tech sector that has been the backbone of a surge in the Kospi index this year. Taipei, Manila, and Jakarta also saw gains.
“Whether it’s conflict fatigue or confidence that the conflict between the U.S. and Iran will be resolved soon, there is limited evidence that the rise in the oil price dampened bond and equity markets,” said National Australia Bank’s Skye Masters. She added that the Washington Post had reported a senior Defence Department warning that it could take six months to fully clear the Strait of Hormuz of mines, with such an operation likely not starting before the end of the war. “It is questionable whether financial markets are correctly pricing the reality that supply constraints will remain an issue for some time,” she wrote.
Raphael Olszyna-Marzys of Bank J. Safra Sarasin remarked, “Financial markets are pricing a high likelihood that traffic through the Strait of Hormuz will soon normalize. Our game-theory model suggests that a narrow agreement to reopen the strait is in both parties’ best interests. This outcome remains our base case. But it also reveals that a misreading of the other party’s intentions could lead to a further ratcheting-up of tensions before we get there.”
Investors found some comfort in strong earnings reports, with South Korean chip titan SK hynix posting a nearly 400 percent jump in net profit, a record for January-March, thanks to the artificial intelligence boom. This was supported by Tesla, which announced forecast-topping first-quarter profits, and Texas Instruments, which provided a healthy outlook. Bloomberg reported that almost 80 percent of the S&P 500 firms that have reported first-quarter earnings so far had beaten analyst estimates.
– Key figures at 0230 GMT –
West Texas Intermediate: UP 0.7 percent at $93.65 a barrel
Brent North Sea Crude: UP 0.6 percent at $102.47 a barrel
Tokyo – Nikkei 225: DOWN 1.1 percent at 58,952.11 (break)
Hong Kong – Hang Seng Index: DOWN 0.9 percent at 25,926.59
Shanghai – Composite: DOWN 0.1 percent at 4,100.38
Euro/dollar: UP at $1.1710 from $1.1709 on Wednesday
Pound/dollar: DOWN at $1.3501 from $1.3506
Dollar/yen: DOWN at 159.41 yen from 159.49 yen
Euro/pound: UP at 86.73 pence from 86.70 pence
© 2024 AFP
