Asia stocks edge up, dollar droops as ceasefire buoys confidence

CNA

4 hours ago

TOKYO :Asian stocks ticked higher and crude oil wallowed near multi-week lows on Wednesday, as investors took a ceasefire between Israel and Iran as a green light to head back into riskier assets and cast aside immediate worries about an energy shock.
The dollar languished close to an almost four-year low versus the euro with two-year U.S. Treasury yields sagging to 1-1/2-month troughs as lower oil prices reduced the risk to bonds from an inflation spike.
The shaky truce has so far held, although Israel says it will respond forcefully to Iranian missile strikes that came after U.S. President Donald Trump announced an end to the hostilities.
In addition, U.S. airstrikes did not destroy Iran's nuclear capability and only set it back by a few months, according to a preliminary U.S. intelligence assessment, contradicting Trump's earlier comments that Iran's nuclear programme had been "obliterated".
Japan's Nikkei rose 0.3 per cent and Australia's stock benchmark edged up 0.1 per cent, while Taiwan's index gained 0.9 per cent. Hong Kong's Hang Seng climbed 0.8 per cent and mainland Chinese blue chips added 0.5 per cent.
An MSCI index of global stocks held steady after pushing to a record high overnight.
"Despite the cease fire between Israel and Iran appearing somewhat tenuous, the markets are shrugging it off," said Kyle Rodda, senior financial markets analyst at Capital.com.
"Realistically, the markets don't care if a limited conflict comprised of mostly air strikes continues between the two countries," he said. "It's the prospect of a broader war, with deeper U.S. intervention and an Iranian blockade of the Strait of Hormuz that really matters. And for now, the risks of that seem low."
U.S. stock futures pointed slightly higher after the S&P 500 jumped more than 1 per cent overnight. Pan-European STOXX 50 futures advanced 0.2 per cent.
Brent crude ticked up 83 cents to $67.97 per barrel, bouncing a bit following a plunge of as much as $14.58 over the previous two sessions. U.S. West Texas Intermediate crude also added 83 cents to trade at $65.20 per barrel.
The two-year U.S. Treasury yield dipped to the lowest since May 8 at 3.787 per cent.
The U.S. dollar index, which measures the currency against six major counterparts, was flat at 97.977.
The euro added 0.1 per cent to $1.1612, edging back towards the overnight high of $1.1641, a level not seen since October 2021.
Gold rose 0.3 per cent to about $3,333 per ounce.
Aside from geopolitics, U.S. monetary policy continues to dominate investor concerns.
Federal Reserve Chair Jerome Powell said on Tuesday that higher tariffs could begin raising inflation this summer, a period that will be key to the U.S. central bank considering possible interest rate cuts.
Data showed that U.S. consumer confidence unexpectedly deteriorated in June, signalling softening labour market conditions.
Markets continue to price in a roughly 19 per cent chance that the Fed will cut rates by a quarter point in July, according to the CME FedWatch tool.