Stan Choe
Stocks are rushing higher worldwide, and oil prices are easing as hopes build that the war with Iran could end soon. That’s even though some of the signals investors saw as hopeful are already under dispute, and several prior bouts of optimism in financial markets quickly got undercut by continued, fierce fighting in the war.
The S&P 500 rallied 1.1 per cent and added to its leap from the day before, which was its best since last spring. That followed even bigger gains for stock markets across Europe and Asia, including an 8.4 per cent surge in South Korea, which were catching up to Wall Street’s rally from Tuesday.
The Dow Jones was up 401 points, or 0.9 per cent in early afternoon trade and the Nasdaq composite was 1.7 per cent higher. The Australian sharemarket is set to rise, with futures at 4.52am AEDT pointing to a rise of 37 points or 0.5 per cent, at the open. The ASX soared by 2.2 per cent on Wednesday. The Australian dollar was trading at US69.42¢.
Oil prices also fell back toward $US100 per barrel after President Donald Trump said late Tuesday that the US military could end its offensive in two to three weeks.
That added to optimism following a couple tenuous signals of hope from earlier Tuesday that Wall Street latched onto, including a news report quoting Iran’s president as saying that it has “the necessary will to end the war” as long as certain requirements are met, including “guarantees to prevent a recurrence of aggression.”
The worry on Wall Street has been that the war may last a long time and keep oil and natural gas from the Persian Gulf out of global markets, which could create a brutal blast of inflation.
But hope has been quick to reverse to doubt on Wall Street, triggering manic swings back and forth for financial markets since the war with Iran began. Trump has also made statements that lifted markets, only to see the gains quickly disappear after increasing his military threats.
Shortly before Wall Street began trading on Wednesday, Trump claimed in a post on his social media network that Iran “has just asked the United States of America for a CEASEFIRE!”
“We will consider when Hormuz Strait is open, free, and clear. Until then, we are blasting Iran into oblivion or, as they say, back to the Stone Ages!!!”
But Iran’s Foreign Ministry spokesman, Esmail Baghaei, quickly called that claim “false and baseless,” according to a report on Iranian state television.
Oil prices also remain high, even if they’ve eased recently. The price for a barrel of Brent crude oil, the international standard, was sitting at $US101.97 following its declines, which is still up from roughly $US70 before the war began.
US gasoline prices rose again overnight to a national average of $US4.06 per gallon, according to the auto club AAA.
Iran, meanwhile, hit an oil tanker off the coast of Qatar and Kuwait’s airport on Wednesday while airstrikes battered Tehran as the fighting continued. Iran also continues to hold a grip on the Strait of Hormuz, where a fifth of the world’s traded oil passes during peacetime.
“De-escalation hopes have given markets a lift, but we think the effects of the war would, in many cases, persist even if the war did end soon,” Thomas Mathews, head of markets, Asia Pacific at Capital Economics, said in a research note Wednesday.
“It’s worth thinking through how markets might fare if the war were to end ‘very soon,’” he wrote. “Do markets have further to recover if sentiment continues to improve? The answer is almost certainly yes.”
The White House said Trump will deliver a public address Wednesday evening on the Iran war.
On Wall Street, most stocks rose as Big Tech powered the move higher. Gains of 4.1 per cent for Alphabet and 1.3 per cent for Nvidia were two of the strongest forces lifting the S&P 500.
Eli Lilly climbed 4.5 per cent after US regulators approved its GLP-1 pill for weight loss.
Such gains have pulled the S&P 500, which sits at the heart of many retirement accounts, back to within 5.4 per cent of its all-time high set early this year. Just on Monday, the index briefly neared a 10 per cent drop from its record, a steep-enough fall that professional investors have a name for it: a “correction.”
Nike sank 14.3 per cent even though it reported a stronger profit for the latest quarter than expected. Analysts said it gave some lacklustre financial forecasts.
Hasbro fell 4.5 per cent after the toy company found someone had gained unauthorised access to its computer network and is working to assess the full impact.
In stock markets abroad, indexes leaped more than 2 per cent in France and Germany. Asian markets had even bigger gains.
Tokyo’s Nikkei 225 jumped 5.2 per cent after a survey showed business sentiment for major Japanese manufacturers improved despite worries about the Iran war.
In the bond market, Treasury yields held relatively steady after a report said US retailers made more money in February than economists expected. A separate report said US manufacturing growth last month was slightly faster than economists expected.
The 10-year Treasury yield held at 4.30 per cent, where it was late Tuesday.
AP
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