Today's Edition
HONG KONG (AFP)
Oil prices plunged Wednesday below $100 a barrel while stocks rallied after the United States and Iran agreed to a two-week ceasefire that will see Tehran temporarily reopen the vital Strait of Hormuz.
With US President Donald Trump's deadline approaching for the Islamic Republic to reopen the waterway, he announced a halt to attacks for two weeks and said he had received a "workable" 10-point proposal. Iran later said it had agreed to safe passage in the Strait, through which a fifth of global oil and gas passes.
The news pushed down crude prices, with West Texas Intermediate losing almost 20 percent and Brent as much as 16 percent as investors heaved a huge sigh of relief after more than five weeks of war that had hammered supplies.
The euphoria sent equities rocketing on hopes the crisis that has shocked the global economy for more than a month will come to an end.
Seoul jumped more than six percent and Tokyo more than five percent, while Sydney and Hong Kong advanced more than two percent.
Shanghai, Mumbai, Bangkok, Manila, Jakarta, Singapore and Wellington were also sharply higher.
The ceasefire also led to a sharp drop in the dollar, which had become the safe-haven while the war raged, with the yen, euro and pound all strengthening.
Gold rallied, having been hit by concerns of a sharp rise in inflation that will keep interest rates elevated, while bitcoin rose.
“Unsurprisingly, the initial market reaction has been a positive one, albeit perhaps not as sizeable as one might've expected, largely owing to the grind higher in risk assets seen since the tail end of Tuesday's cash session,” said Michael Brown at Pepperstone.
“Participants have been desperate for anything resembling good news for some weeks now, and even more desperate to see concrete steps being taken towards de-escalation.
Oil prices remove the chokehold that has weighed on regional risk sentiment, especially in markets that feel imported energy shocks first and hardest," he said.
"With crude backing off, the pressure on inflation expectations and front-end yields eases at the margin, and that is enough to let capital rotate back toward risk, at least for now."
Key Figures
West Texas Intermediate: DOWN 15.4 percent at $95.59 a barrel
Brent North Sea Crude: DOWN 13.3 percent at $94.71 a barrel
Tokyo - Nikkei 225: UP 5.1 percent at 56,177.81
Hong Kong - Hang Seng Index: UP 2.8 percent at 25,821.88 (break)
Shanghai - Composite: UP 1.9 percent at 3,964.72 (break)
Euro/dollar: UP at $1.1670 from $1.1585 on Tuesday
Pound/dollar: UP at $1.3396 from $1.3274
Dollar/yen: DOWN at 158.40 yen from 159.70 yen
Euro/pound: DOWN at 87.12 pence from 87.28 pence
New York - Dow: DOWN 0.2 percent at 46,584.46 (close)
London - FTSE 100: DOWN 0.8 percent at 10,348.79 (close)
