Stan Choe
Stocks are rising around the world, and oil prices are falling as hopes grow that the war with Iran could end soon. That’s even though some of the signs that investors saw as optimism are already under fire, and several earlier bouts of optimism in financial markets were quickly dampened by continued, fierce fighting in the war.
The S&P 500 gained 1.1 percent, extending its gain from the previous day, which was its best since last spring. That followed bigger gains for stock markets across Europe and Asia, including an 8.4 percent rise in South Korea, which was reaching Wall Street’s rally from Tuesday.
The Dow Jones was up 401 points, or 0.9 percent in early afternoon trading and the Nasdaq composite was 1.7 percent higher. Australia’s share market is expected to rise, with futures at 4.52am AEDT pointing to a rise of 37 points or 0.5 per cent, at the open. Part of the ASX increased by 2.2 percent on Wednesday. The Australian dollar was trading at US69.42¢.
Oil prices also fell to $100 a barrel after President Donald Trump said late Tuesday that the U.S. military could end its invasion within two to three weeks.
That boosted optimism following several signs of optimism from earlier on Tuesday that Wall Street followed, including a news report that quoted Iran’s president as saying he has a “significant interest in ending the war” provided certain demands are met, including “guarantees to prevent the recurrence of aggression.”
Wall Street’s concern has been that the war could drag on for a long time and keep oil and natural gas from the Persian Gulf out of global markets, which could lead to a brutal burst of inflation.
But optimism has quickly turned into skepticism on Wall Street, leading to a sharp turnaround in financial markets since the war with Iran began. Trump has also made remarks that have lifted the markets, only to see the gains quickly disappear after he escalated his military threats.
Shortly before Wall Street opened for business on Wednesday, Trump claimed in a post on his social media that Iran has “asked the US for a Ceasefire!”
“We will pay attention when the Strait of Hormuz is open, free, and open. Until then, we forget Iran into oblivion or, as they say, back to the Stone Age!!!”
But Iran’s Foreign Ministry spokesman, Esmail Baghaei, quickly called the claims “false and baseless,” according to a report on Iranian state television.
Oil prices also remain high, even if they have eased recently. The price of a barrel of Brent crude oil, the international standard, was $101.97 following the decline, still up from about $US70 before the war began.
US gasoline prices rose again overnight to a national average of $US4.06 a gallon, according to the AAA auto club.
Iran also hit an oil tanker off the coast of Qatar and a Kuwait airport on Wednesday as airstrikes pounded Tehran as fighting continued. Iran also continues to hold the Strait of Hormuz, through which a fifth of the world’s traded oil passes in peacetime.
“Hopes of a slowdown have lifted the market, but we think the effects of the war would continue, in many cases, even if the war were to end soon,” Thomas Mathews, head of markets, Asia Pacific at Capital Economics, said in a research note on Wednesday.
“It’s worth thinking about how markets might fare if the war ended ‘too soon,'” he wrote. “Should markets recover further if sentiment continues to improve? The answer is almost certainly yes.”
The White House said Trump will give a public speech Wednesday evening about the Iran war.
On Wall Street, stocks soared as Big Tech gained momentum. A 4.1 percent gain for Alphabet and a 1.3 percent gain for Nvidia were the two strongest forces that lifted the S&P 500.
Eli Lilly rose 4.5 percent after US regulators approved its GLP-1 weight loss pill.
Such gains have pulled the S&P 500, which is at the center of many retirement accounts, back to within 5.4 percent of its high set earlier this year. Just on Monday, the index briefly came close to falling 10 percent from its record high, a fall big enough that professional investors have a name for it: “the correction.”
Nike sank 14.3 percent even though it reported a higher-than-expected profit for the latest quarter. Analysts said it gave poor financial forecasts.
Hasbro fell 4.5 percent after the toy company found someone had gained unauthorized access to its computer network and is working to assess the full impact.
In stock markets abroad, indexes jumped more than 2 percent in France and Germany. Asian markets had the biggest gains.
Tokyo’s Nikkei 225 jumped 5.2 percent after a survey showed business sentiment at Japan’s top manufacturers improved despite concerns about the Iran war.
In the bond market, Treasury yields held slightly lower after a report said US retailers made more money in February than economists had expected. A separate report said US manufacturing growth last month was slightly faster than economists had expected.
The 10-year Treasury yield was at 4.30 percent, where it was Tuesday evening.
AP
The Market Recap is a summary of the day’s trading. Let’s find each otherekday afternoon.
