9 hours ago
6
SINGAPORE: Stocks fell, the dollar firmed and oil rose on Thursday (Apr 2) after United States President Donald Trump said Washington's "core strategic objectives" in the Iran war were nearing completion but stopped short of providing a clear outline of when the conflict would end.
The prospect of an end to the month-long US-Israeli war with Iran has lifted global stocks and knocked the dollar off its recent highs in the past two sessions after a brutal March, where soaring oil prices sent risk assets into a tailspin.
But Trump, in his primetime speech, said the US will strike Iran "extremely hard" over the next two to three weeks and hit the country into the "Stone Ages".
That sent stocks retreating, with US stock futures down 0.67 per cent while European futures were 0.1 per cent lower.
MSCI's broadest index of Asia-Pacific shares outside Japan slid 0.75 per cent. Japan's Nikkei reversed course to trade down 0.79 per cent in volatile trading.
"We have no additional certainty or clarity around (the) timeline from this address and this is what the market was looking for," said John Withaar, senior portfolio manager at Pictet Asset Management.
"The fact that we can expect two to three more weeks of action, boots on the ground were not ruled out and that threats to hit infrastructure were reiterated will put the market back on the defensive, particularly as we come into the long weekend," he said.
Analysts and investors were focusing on when and how the Strait of Hormuz, a major fuel shipment route, would reopen and ease the bottleneck in supply that has hit Asian economies hard.
Iran has repeatedly fired on Gulf countries, some home to US bases, and is using the Strait of Hormuz, which carries a fifth of global oil and liquefied natural gas, as leverage.
"There was no mention in Trump's speech about the details on when the war ends or when the passage of the Strait of Hormuz will become possible," said Kazunori Tatebe, chief strategist at Daiwa Asset Management.
"So the domestic equities are not going to head for a further rise. We need another step forward, like the possibility for the opening of the strait."
Oil prices surged after Trump's address did little to soothe investor worries over the strait's closure.
Brent jumped more than 4 per cent to as high as US$105.55, while West Texas Intermediate climbed 3 per cent to hit US$103.16.
Both contracts had been falling before the US president started his speech.
Higher energy prices in March stoked fears of global inflation, with worries about slowing growth also sapping sentiment.
The US dollar has been the haven of choice among investors during the tumult, and the greenback rose against most currencies after the speech.
The euro weakened 0.25 per cent to US$1.156. The front-month Brent contract for June rose over 3 per cent to US$104.75 per barrel.
