Oil prices jumped and US stock futures fell on Monday as mounting tensions over a seized Iranian cargo ship cast fresh doubt on the Middle East ceasefire, though Asian equity markets largely shrugged off the risks, with Taiwan’s shares touching a record high.
Brent crude futures rose around 6% to $95.36 a barrel, while S&P 500 futures fell 0.6% and European futures declined 1.2%. Benchmarks in Seoul, Taipei and Tokyo advanced nonetheless, with Hong Kong’s Hang Seng up 0.7%, Japan’s Nikkei climbing 0.8% and South Korea’s KOSPI rising 1%.
The ceasefire in the Iran war, due to run until Tuesday, was thrown into question after the US seized an Iranian cargo ship and Tehran’s military command vowed to retaliate. Iran also rejected a new round of peace talks, its state news agency reported, hours after President Donald Trump said he was dispatching envoys to Pakistan and threatened fresh strikes if Tehran did not accept his terms.
Despite the deteriorating diplomatic picture, many traders remained cautiously optimistic. “The headlines look bad; it looks like there’s disagreement, which has led to a little bit of re-escalation,” said Damien Boey, portfolio strategist at Wilson Asset Management in Sydney. “But I think, ultimately, both sides want to be able to do a deal — that’s part of the reason why the market’s optimistic and not selling off too much.”
Iran has reimposed its de facto closure of the Strait of Hormuz, though Kpler data showed more than 20 vessels carrying oil products, metals, gas and fertiliser passed through on Saturday — the busiest day for the chokepoint since 1 March. “The critical barometer of geopolitical risk has been distilled into one data point: the number of ships transiting the Strait of Hormuz,” said Bob Savage, head of markets macro strategy at BNY.
One of the sharper notes of caution came from Australia’s National Australia Bank, which flagged a $500 million impairment charge, citing expectations that the war would drive up bad debts. Its shares fell 3.6%.
Bond markets retreated after Friday’s rally, with the yield on benchmark 10-year US Treasuries rising 2.2 basis points to 4.266%. The dollar steadied after two weeks of selling pressure, buying 158.8 yen and trading at $1.1760 per euro. Wall Street indices touched record highs on Friday, supported by expectations of strong first-quarter earnings, the bulk of which are due this week.
Elsewhere, British Prime Minister Keir Starmer was set to address parliament on Monday, facing calls for his resignation over his handling of the appointment of Peter Mandelson as US ambassador despite Mandelson having failed a vetting process.
(Reuters)