Online Reporter
A RECORD-BREAKING rally in global equities stalled in Asia as investors trimmed positions ahead of the weekend while awaiting progress on extending the United States-Iran ceasefire.
The MSCI All Country World Index — the broadest barometer of global stocks — slipped 0,1 percent after a 10-day rally that drove it to a record high on Thursday.
While Wall Street gauges also closed at all-time highs, momentum faded in Asia, with regional shares falling by 0.9 percent as traders awaited signs of progress in talks aimed at sustaining a US-Iran truce set to expire next week.
Equity-index futures indicated European shares would also open lower. Netflix tumbled 9.6 percent in post-market trading after its second-quarter forecast fell short of analysts’ expectations.
Global crude benchmark Brent dropped by 1.3 percent to US$98,10 a barrel after President Donald Trump expressed optimism about securing a permanent ceasefire with Iran.
Gold was a touch higher at about US$4 800 an ounce, while Treasuries and a gauge of the dollar were little changed in a cautious end to the week.
Investors are awaiting progress in talks that could reopen the Strait of Hormuz, easing crude flows and relieving pressure on economies after oil prices surged following the conflict’s onset in late February.
While crude has pared its war-driven premium and stocks have climbed to record highs, policymakers are warning that markets may be underestimating the war’s economic toll.
“Markets head into the final session of the week sitting at key technical and psychological levels, with conviction still lacking as traders wait for clearer signals out of the Middle East,” Nick Twidale, chief market analyst at AT Global Markets, wrote in a note.
Trump claimed, without evidence, that Iran had agreed to terms it has long resisted, including giving up ambitions for a nuclear weapon and turning over nuclear material.
The deal would also include “free oil” and an opening of the Strait of Hormuz, the president said. The prospects for a deal with Iran are “looking very good”, he said.
Tehran has not confirmed it has made those concessions.
Earlier, Trump announced a 10-day ceasefire between Israel and Lebanon. His comments on Thursday made no mention of Hezbollah.
Israeli Prime Minister Benjamin Netanyahu confirmed in a video message that he had agreed to the truce.
Meanwhile, some Gulf Arab and European leaders believe that a US-Iran peace deal will take about six months to be agreed and that the warring sides should extend their ceasefire to cover that time frame, according to officials from the regions familiar with the matter.
Traders are also focused on the US dollar, which has weakened after rallying on haven demand since the war began in late February. Deutsche Bank AG and Wells Fargo & Co. are among banks declaring the greenback’s
war-driven haven rally is likely over as the
fragile ceasefire between the US and Iran prompts investors to seek riskier assets. — Bloomberg
Optimism over easing Middle East tensions has helped several equity markets unwind war-driven risk premiums.
Benchmarks in Singapore and Taiwan, and China’s CSI 300 Index had all reversed losses that came after the US and Israel attacked Iran in late February.
On Thursday, Japan’s Nikkei 225 Stock Average ended the day at a new record high, erasing its losses from the Iran war on optimism the new peace talks may hasten the end to the conflict.
The gauge dropped by 1 percent on Friday.
“Asian markets are pricing in a ceasefire extension that does not yet exist,” said Oriano Lizza, a sales trader at CMC Markets in Singapore. “The Nikkei has soared past its February record, while Brent crude has steadied above US$94 per barrel after whipsawing at the start of the week. These moves have relied on diplomatic signals rather than a signed deal. That sets up real risk in current market positions.” — Bloomberg
