Asia markets stabilise, dollar droops following Middle East truce
TOKYO :Asian stocks stabilised on Wednesday as crude oil hovered near multi-week lows as a ceasefire between Israel and Iran buoyed sentiment, even as hostilities threatened to flare up again.
The dollar wallowed close to an almost four-year trough versus the euro with two-year U.S. Treasury yields sagging to 1 1/2-month lows as lower oil prices reduced the risk to bonds from an inflation shock.
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 had 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 and Australia's stock benchmark were flat, while Taiwan's index gained 1 per cent.
Hong Kong's Hang Seng rose 0.6 per cent and mainland Chinese blue chips eased 0.1 per cent.
U.S. stock futures were little changed.
An MSCI index of global stocks held steady after climbing to a record high overnight.
Brent crude ticked up 81 cents to $67.95 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 added 70 cents to $65.07 per barrel.
"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 US intervention and an Iranian blockade of the Strait of Hormuz that really matters. And for now, the risks of that seem low."
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, slipped 0.1 per cent to 97.854.
The dollar slipped 0.1 per cent to 144.70 yen.
The euro added 0.1 per cent to $1.1625, edging back towards the overnight high of $1.1641, a level not seen since October 2021.
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. Powell spoke at a hearing before the House Financial Services Committee.
Data showed that U.S. consumer confidence unexpectedly deteriorated in June, signalling softening labour market conditions.
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Asia stocks edge up, dollar droops as ceasefire buoys confidence
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 "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.
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Trump baffles with sudden U-turn on China buying Iranian oil
[WASHINGTON] US President Donald Trump on Tuesday (Jun 24) appeared to undermine years of US sanctions on Iran, giving its biggest customer, China the green light to carry on buying its oil as he seeks to bolster a ceasefire with Israel. The announcement on social media, which surprised both oil traders and officials in his own government, could undermine the central element of Washington's Iran policy under multiple administrations, which have sought to cut the regime's main source of revenue by making its top export off limits. 'China can now continue to purchase oil from Iran,' the president said on Truth Social, amid a flurry of posts demanding Israel and Iran cease hostilities. The statement landed only hours after Trump declared the Middle East rivals had agreed to a ceasefire, which got off to a shaky start with early breaches by both sides. It follows massive US airstrikes on several of the Islamic Republic's nuclear facilities on Sunday, an offensive aimed at stopping Tehran from obtaining an atomic weapon. Oil prices extended losses on Tuesday after Trump's comments, with West Texas Intermediate futures sinking 6 per cent to settle near US$64 a barrel. Futures plunged as the threat to crude flows from the Israel-Iran conflict faded. US Treasury and State department officials handling Iranian oil sanctions were surprised by Trump's statement and uncertain how to immediately interpret it, according to sources familiar with the situation. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up In the meantime, however, Treasury will continue to strictly enforce related sanctions, said one of the sources, who asked not to be identified given the political and market sensitivity of the issue. The Treasury Department did not immediately respond to requests for comment, while the State Department referred questions to the White House. A senior White House official later signalled that sanctions would remain, saying that the president continues to call on China and others to import American oil rather than Iranian, which would be a violation of US sanctions. The official added that Trump's post was only intended to highlight that his actions over the past several days ensured that the Strait of Hormuz was not impacted, which the official said would have been devastating for China. Tammy Bruce, State Department spokeswoman, declined to provide further specifics during a briefing on Tuesday. 'I'm not going to get ahead of the president or try to guess what his strategy will be,' she said when asked about the comment. 'Things happen quickly and I think we will find out sooner rather than later.' The apparent shift also comes as the Trump administration seeks to hammer out a new trade framework with China and climb down from a tariff war that saw duties reach levels high enough to cut all trade between the world's two biggest economies. The comments appeared to be Trump 'throwing a bone' to China and Iran for cooperating in their respective talks with the US, said Mark Malek, chief investment officer at Siebert. 'Most of us are thinking that it's just rhetoric at this point. But it definitely took me by surprise.' Allowing a specific carve out for China may be an effort by Trump to send positive signals to Beijing as he seeks a new tariff deal, said a source familiar with the president's thinking, also asking not to be identified. While the potential shift may ease some legal risks around China's buying of Iranian oil, it's unclear what impact the change would have on actual flows. China, the world's biggest importer, gets about 14 per cent of its crude from Iran. But that figure is likely higher as some imports are masked as shipments from Malaysia, as well as the United Arab Emirates and Oman, in order to circumvent US sanctions, which Beijing does not recognise. While China has not officially purchased Iranian barrels since June 2022, third-party data providers and traders signal flows have been resilient despite broad US sanctions. That's because the Chinese have built a supply chain outside of Western control, which includes dark fleet ships and yuan-denominated payments, supporting imports of more than one million barrels a day. Iran's oil, often purchased at a discount, is vital for China's substantial private refining sector and a crucial source of fuel for its economy, which has struggled under the weight of a slumping property sector. 'The Iranian oil sanctions have been so significant for so long, but also with relatively muted enforcement,' said Daniel Tannebaum, former Treasury official and partner at Oliver Wyman. 'It would be premature to think that this policy, which would benefit both China and Iran, would go ahead without a longer-term view of ensuring stability in the region, before just literally opening up the spigots to allow legal trade of Iranian oil by China.' Trump as recently as last month, insisted all purchases of Iranian oil or petrochemical products 'must stop, NOW!' and that buyers would be subject to secondary sanctions and prevented from engaging in any business with the US. That threat built on previous warnings from his administration. In February, Treasury Secretary Scott Bessent said Washington intended to squeeze Iran's oil exports to less than 10 per cent of current levels, as it renewed the 'maximum pressure' campaign deployed during Trump's first term. As part of that effort, the US has sanctioned hundreds of oil tankers for their role in handling Tehran's petroleum and, absent an easing in those measures, some buyers may still take a more cautious approach. The White House has also targeted Chinese entities that bought Iranian oil, something that could make other buyers wary. Likewise, secondary sanctions on Iran's sales remain in place and it's not clear where the president's remarks will leave those. The sanctions were intended to force Iran to voluntarily give up uranium enrichment so that it would never be in a position to obtain a nuclear weapon. It's still unclear if US airstrikes over the weekend seriously damaged the country's nuclear facilities, while the International Atomic Energy Agency still does not know what happened to Tehran's stockpile of 409 kilogrammes of highly-enriched uranium – potentially enough for 10 nuclear warheads. BLOOMBERG
