Stocks rose Friday with investors still optimistic about the shaky ceasefire in the US-Iran war ahead of planned weekend talks, though oil prices extended gains over worries Israel’s continued attacks on Lebanon could shatter the peace process.
- +Stocks Rally On Optimism Over Iran War Ceasefire, Oil Extends Gains
- +West Texas Intermediate: UP 0.8 percent at $98.64 a barrel
- +Brent North Sea Crude: UP 0.7 percent at $96.57 a barrel
- +Tokyo – Nikkei 225: UP 1.8 percent at 56,924.11 (close)
- +Hong Kong – Hang Seng Index: UP 0.4 percent at 25,862.12
- +Shanghai – Composite: UP 0.5 percent at 3,986.22 (close)
- +London – FTSE 100: FLAT at 10.600,80
- +Euro/dollar: DOWN at $1.1687 from $1.1707 on Thursday
- +Pound/dollar: DOWN at $1.3419 from $1.3441
- +Dollar/yen: UP at 159.28 yen from 159.06 yen
- +Euro/pound: DOWN at 87.09 pence from 87.09 pence
- +New York – Dow Jones: UP 0.6 percent at 48,185.80 (close)
Tuesday’s announcement of a two-week truce that would see the Strait of Hormuz reopened, having been closed since the start of the war, sparked a wave of euphoria across markets.
Tuesday’s announcement of a two-week truce that would see the Strait of Hormuz reopened, having been closed since the start of the war, sparked a wave of euphoria across markets.
But hopes for an end to the crisis have been hit by squabbles over the agreement and the future of the key waterway, through which about a fifth of the world’s oil and gas passes.
US and Iranian delegations are due in Pakistan for peace talks, but they come as Tehran says Israel has already broken terms of the ceasefire by continuing to hit Lebanese targets, where Israel says Iran-backed Hezbollah is located.
The United States and Israel deny an end to attacks on Lebanon was in the deal.
Meanwhile, Trump warned on Thursday against Iran’s plan to charge a toll for ships passing through Hormuz, saying on social media: “They better not be and, if they are, they better stop now!”
In a second message just a few minutes later, he added that “very quickly, you’ll see Oil start flowing, with or without the help of Iran.”
He also said Tehran was “doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz”.
Just 10 vessels have passed through the waterway since the Middle East war ceasefire took effect, according to maritime tracking data.
Only one of those tankers is not Iranian.
Equity markets, which have been hammered since the war broke out on February 28, extended the week’s gains.
Tokyo, Hong Kong, Seoul, Shanghai, Taipei, Singapore, Mumbai, Bangkok, Jakarta and Manila were all up, though Sydney slipped with Wellington.
London was barely moved at the open while Paris and Frankfurt edged up.
The gains followed a second healthy run-up on Wall Street.
Oil prices climbed to sit just below $100 a barrel. West Texas Intermediate briefly jumped above the key level on Thursday.
Analysts said the equity gains were helped by news that Israel and Lebanon will hold talks next week in Washington.
That comes after NBC reported that Trump had asked Israeli Prime Minister Benjamin Netanyahu for a scale-back in strikes on its northern neighbour to ensure the success of negotiations with Iran.
“If an Israel-Lebanon ceasefire can be agreed, that is in turn likely to increase the chances of a US-Iran deal being struck, thus raising the likelihood of a swifter normalisation of commodity flows through the Strait of Hormuz,” wrote Pepperstone’s Michael Brown.
With stocks rising, IG market analyst Fabien Yip said those “that suffered the deepest drawdowns during the conflict are likely candidates for the sharpest near-term recovery”.
But she warned: “The ceasefire is temporary and the details remain sparse. Iran’s 10-point proposal and Washington’s stated positions retain substantial differences, and the Islamabad talks carry no guarantee of success.
“Even the reopening of the Strait of Hormuz — subject to Iran’s ‘technical limitations’ — will take weeks, if not months, before shipping backlogs are cleared and supply chains normalise.
“Crude oil prices are therefore unlikely to revert to pre-war levels in the near term.”
The head of the International Monetary Fund said Thursday it will lower global growth forecasts owing to the conflict’s “scarring effects”.
“Even in a best case, there will be no neat and clean return to the status quo ante,” managing director Kristalina Georgieva said, citing spiralling energy costs, infrastructure damage, supply disruptions and a loss of market confidence.
Investors are keeping tabs on the release later Friday of US inflation data, which observers say could provide an idea about the impact of the surge in crude on consumers.
Data in China showed the spike in energy costs saw factory gate prices rise for the first time in more than three years last month.
In Japan, Prime Minister Sanae Takaichi said Friday the country, which depends on the Middle East for around 95 percent of its oil imports, planned to release a further 20 days’ worth of crude reserves as early as next month.
In company news, shares in Japanese retail titan Fast Retailing soared 10 percent to a record high after it hiked its full-year operating profit outlook, helped by healthy demand for its Uniqlo brand in the United States and Europe.
West Texas Intermediate: UP 0.8 percent at $98.64 a barrel
Brent North Sea Crude: UP 0.7 percent at $96.57 a barrel
Tokyo – Nikkei 225: UP 1.8 percent at 56,924.11 (close)
Hong Kong – Hang Seng Index: UP 0.4 percent at 25,862.12
Shanghai – Composite: UP 0.5 percent at 3,986.22 (close)
London – FTSE 100: FLAT at 10.600,80
Euro/dollar: DOWN at $1.1687 from $1.1707 on Thursday
Pound/dollar: DOWN at $1.3419 from $1.3441
Dollar/yen: UP at 159.28 yen from 159.06 yen
Euro/pound: DOWN at 87.09 pence from 87.09 pence
New York – Dow Jones: UP 0.6 percent at 48,185.80 (close)
