- Asian stock markets tumble amid fears of persistently higher oil prices.
- US President Trump is willing to end the war with Iran without the reopening of Hormuz.
- S&P 500 futures gain sharply as Trump’s readiness to end the war has improved the market mood.
Asian stock markets are significantly down in Tuesday’s trade as fears of oil prices remaining persistently higher are intact, even as hopes of an end to the month-long war in the Middle East have improved.
As of writing, Nikkei 225 is down almost 11% to near 51,410, Shanghai trades 0.16% lower to near 3,915, Hang Seng declines 0.4% at around 24,650.
Earlier in the day, a Wall Street Journal (WSJ) report showed that United States (US) President Donald Trump is willing to end the war with Iran despite the Strait of Hormuz remaining closed, as Washington doesn’t intend to stretch the military mission beyond his timeline of four to six weeks. Trump said that he will pursue a diplomatic way to reopen waterways.
The continuation of the Hormuz closure points to oil prices remaining persistently higher, a scenario that limits the investment capability of countries, such as major Asian economies, which largely rely on oil imports to meet their energy needs.
At the start of the Middle East conflict, Tehran succeeded in achieving military dominance near the Strait of Hormuz, a passage to almost 20% of global energy supply, as part of retaliation against the US and Israel for killing their top leaders.
Meanwhile, major riskier assets, across the world, have seen buying interest. S&P 500 futures have gained 0.8% and risen to near 6,400. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally down to near 100.45.
