Oil prices fell sharply and Asian stock markets surged to record highs as hopes grew that the US and Iran were nearing a deal to reopen the Strait of Hormuz, though optimism was tempered by continuing military tensions in the waterway.
Brent crude fell 7.8 per cent to $101.27 a barrel on Wednesday – down from more than $115 earlier in the week – after US president Donald Trump said the strait could be “open to all” if Iran accepted a reported agreement, the details of which he did not disclose.
Axios reported the US believed it was close to a one-page memorandum of understanding to end the war, citing four sources, which would declare an end to hostilities and begin a 30-day period of negotiations on reopening the strait, limiting Iran’s nuclear programme and lifting US sanctions. An Iranian foreign ministry spokesperson said the US proposal was still being considered.
Brent briefly fell below $97 before pushing back above $100 after Mr Trump threatened to resume bombing “at a much higher level and intensity” if Iran did not accept the agreement.
By Thursday morning, Brent had edged back up 51 cents to $101.78 and US benchmark crude gained 55 cents to $95.63.
Wall Street had its best day in nearly a month on Wednesday. The S&P 500 climbed 1.5 per cent to a fresh record at 7,365, the Dow Jones Industrial Average jumped 1.2 per cent to 49,910 and the Nasdaq rose 2 per cent to 25,838.
The gains carried into Asia on Thursday, with Tokyo’s Nikkei surging 5.7 per cent to a record intraday high of 62,915 as markets reopened after the Golden Week holiday. The Nikkei has gained around 18 per cent over the past three months and nearly 73 per cent over the past year, driven by strong buying in tech stocks benefiting from the AI boom.
Taiwan’s Taiex surged 2.1 per cent, the Hang Seng in Hong Kong gained 1.3 per cent and Australia’s S&P/ASX 200 rose 0.9 per cent. South Korea’s Kospi slipped 0.4 per cent as traders locked in profits after the index jumped nearly 7 per cent the previous day to clear 7,000 for the first time.
The AI trade continued to power gains. AMD surged 18.6 per cent after topping expectations for both profit and revenue, with chief executive Lisa Su citing continued growth from AI technology driving demand from data centres.
Super Micro Computer rallied 24.5 per cent on stronger-than-expected earnings and Nvidia rose 5.7 per cent, the single largest contributor to the S&P 500’s advance given the chipmaker’s enormous market weighting. CVS Health climbed 7.6 per cent and Disney gained 7.5 per cent after both raised their full-year forecasts.
Companies with large fuel bills also rallied on hopes that oil prices would continue to ease. United Airlines and Carnival each gained 6.8 per cent and Royal Caribbean rose 8.8 per cent.
Optimism was tempered, however, by continued military activity in the strait. The US military said a fighter jet shot out the rudder of an Iranian oil tanker in the Gulf of Oman on Wednesday after the vessel attempted to breach the American blockade of Iran’s ports.
Secretary of State Marco Rubio told reporters the initial US-Israeli offensive in Iran was over, adding that Washington would prefer a deal.
Iran has not responded. Parliamentary speaker Mohammad Ghalibaf said: “We know well that the continuation of the status quo is intolerable for America, while we are just getting started.”
The dollar fell to 156.32 yen from 156.40, while the euro rose to $1.1756 from $1.1747.