The Tamesis
Oil prices rose on Wednesday after U.S. President Donald Trump extended a ceasefire deal with Iran, while Asian markets fell sharply.
Investors are in a delicate wait-and-see phase as to whether the conflict will break out again. Trump has said the United States will continue to block Iranian ports, but Iran has seized two ships for maritime violations, escalating tensions in the Strait of Hormuz.
Analysts say the two countries still have differences over issues such as a ceasefire, the U.S. blockade, nuclear issues and strait control. Meanwhile, the Revolutionary Guards displayed ballistic missiles at a military parade in Tehran.
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With energy shipments remaining blocked in the Strait of Hormuz and the Gulf, traders remain wary of a potential resumption of strikes – even as Wall Street indexes hit record highs after recouping losses since the outbreak of the Middle East war in late February.
But analysts say expectations are high that both Trump and the Iranian authorities want to end a war that has sent oil and gas prices soaring and threatened global economic growth.
Solid corporate earnings and enthusiasm for artificial intelligence also boosted investor confidence, with dozens of blue-chip companies beating expectations and billions of dollars in tech deals fueling investor optimism about the recent stock market rally.
Trump said late on Tuesday he was delaying a two-week truce with Tehran at the request of Pakistani mediators and giving Iran’s “broken” leadership time to develop a proposal.
The New York Post on Wednesday cited unnamed Pakistani sources and U.S. President Donald Trump as saying that a second round of U.S.-Iran talks could take place within the next three days.
“It’s possible!” Trump reportedly told the Washington Post via text message when asked about a Pakistani source who was mediating the first round of talks, saying that the second round of talks “is expected to take place in Islamabad in the next 36 to 72 hours.”
Asian markets mixed
Asian markets were mixed on Wednesday, with Tokyo’s Nikkei rising 0.4% and the Shanghai Composite rising 0.5%.
However, Hong Kong’s Hang Seng Index fell 1.2%, Sydney’s ASX index fell 1.1%, and Mumbai’s BSE Sensex index fell 0.95%. Most other markets in the region posted declines.
Wall Street then opened higher, while most European stocks edged lower amid mixed investor sentiment in Asia.
“Most people seem to believe that the war will end soon or that it will have little impact on the U.S. economy even if energy prices remain relatively high,” Trade Nation senior market analyst David Morrison told AFP.
Elon Musk’s SpaceX said on Tuesday it would partner with artificial intelligence coding startup Cursor and have an option to acquire the company for $60 billion, the latest sign of corporate confidence that artificial intelligence will continue to drive growth.
Inflation soars
But with oil shipments from Hormuz remaining shut, Asian and European countries most reliant on Middle Eastern energy supplies are scrambling to contend with a spike in inflation that threatens to undermine economic growth.
“Given that concerns remain about the impact of the energy crunch on the global economy, extending the ceasefire will not do much to soothe nerves,” said Suzanne Street, chief investment strategist at Fortune Club.
North Sea Brent crude topped $100 a barrel again, while West Texas Intermediate, the main U.S. benchmark, climbed back above $90 a barrel.
Iranian gunboats on Wednesday seized two container ships trying to transit the blocked Strait of Hormuz, the maritime agency said, even as U.S. President Donald Trump announced an extension of the ceasefire to give more time for peace talks.
“The United States and Iran may be trying to increase leverage and play a game of who can blink first,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp.
“Regardless of the outcome, temporary suspense may lead to subdued risk appetite,” he said.
Beyond the war, investors are also closely watching the Senate confirmation hearings for Kevin Warsh, Trump’s nominee to succeed Federal Reserve Chairman Jerome Powell, whose term ends in May.
Trump criticized Powell for not cutting rates more aggressively and told CNBC on Tuesday that he would be disappointed if Warsh doesn’t quickly lower borrowing costs amid rising inflation.
Warsh told lawmakers he would not be controlled by the president as he answered questions about his assets and the central bank’s independence at his first hearing.
In Europe, official data showed Britain’s annual inflation jumped to 3.3% in March as oil and gas prices surged due to war in the Middle East.
Both Germany and Italy have lowered their GDP growth forecasts for this year and next.
U.S. stocks rose shortly after trading began, with markets reportedly pleased that the ceasefire was continuing.
Key figures at 1340 GMT
North Sea Brent crude oil: rose 1.6% to $100.02 a barrel.
West Texas Intermediate crude oil: rose 1.6% to $91.27 a barrel.
TOKYO – Nikkei 225: up 0.4% to 59,585.86 (close).
Hong Kong – Hang Seng Index: down 1.2% to 26,163.24 (close).
Shanghai – Composite Index: up 0.5% to 4,106.26 (close).
NEW YORK – Dow Jones: Up 0.6% to 49,149.38
NEW YORK – S&P 500: up 0.7% to 7,111.23.
NEW YORK – Nasdaq: up 0.7% to 24,435.87.
LONDON – FTSE 100: down 0.1% to 10,486.87.
USD/JPY: fell from 159.25 to 159.18.
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