Asia stocks soar on optimism that Iran war could end soon; STI up 2%

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Singapore - Asian stocks jumped the most in a year on April 1, tracking a Wall Street rally, on optimism that the Iran war that has jolted global markets and disrupted energy supplies may be nearing a conclusion.

Japan’s Nikkei Index surged 5 per cent while South Korea’s Kospi soared 9 per cent. Hong Kong’s Hang Seng Index rallied 2.15 per cent.

Singapore’s Straits Times Index was up 2 per cent at 2.07pm.

US President Donald Trump on March 31 said he foresaw the US ending the war with Iran within two to three weeks, and would leave it to other nations to resolve issues with the Strait of Hormuz.

Mr Trump, who will give an address to the nation at 9pm Eastern Time on April 1 to provide an “important update” on Iran, said the Islamic republic could still reach a deal with the US. He added, however, that an agreement with Tehran is not a prerequisite for the war to conclude.

“Markets are reading this as a full-on positive, in that we see an end to the conflict,” said Mr Nick Twidale, chief market analyst at AT Global Markets in Sydney. “Personally, I’m not convinced over the longer term. I think we have more news-driven volatility in the days ahead, and investors will soon want concrete evidence that the end of the war is in sight.”

Still, with uncertainty over the war and the status of the Strait of Hormuz, crude oil retraced some of the losses it made on March 31.

Brent rose above US$105 a barrel after declining 3.2 per cent on March 31, while West Texas Intermediate was near US$103. 

It is also unclear how concrete the latest timeline offered by the president will be. Mr Trump is known to frequently offer two weeks as the potential timeframe for big decisions – imposing deadlines on his own administration and regularly blowing past them. The US has also moved additional troops into the region in recent days, preserving the possibility for future escalation if Mr Trump changes his mind.

A third US aircraft carrier strike group is heading to the Middle East as military operations against Iran continue, according to a US official familiar with the matter, after the navy’s flagship carrier left the region for repairs. 

Mr Trump also called on other nations to take control of the Strait of Hormuz, expressing his frustration that the monthlong war is unresolved and the latest sign he is looking to exit the conflict as oil and gas prices surge.

“While Trump may be considering an end to hostilities, the key issue – the status of the Strait – remaining unresolved will be what’s more important from the market’s point of view,” said Mr Fawad Razaqzada at Forex.com. “It’s difficult to see Iran stepping back without extracting concessions.” BLOOMBERG