Asian Stocks Advance, Crude Oil Pares Declines: Markets Wrap

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(Bloomberg) — Asian stocks rebounded from Monday’s selloff and crude oil fell, as President Donald Trump signaled the Iran war may be nearing an end, boosting investor sentiment.

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The MSCI Asia Pacific Index rose 2% — after tumbling 3.7% on Monday — with roughly two stocks advancing for every one that declined. A gauge of the region’s technology shares surged 3.5%. Asian equities were off their session highs.

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The market gains came as Trump said the war with Iran would resolve “very soon.” The president said that he did not believe the conflict would be over this week, but insisted the operation was ahead of schedule. The US military objectives could be described as “pretty well complete,” he said.

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Brent crude fell 4.1% to $94.92 a barrel after earlier sliding as much as 11% before trimming some of those losses. The dollar weakened against all its Group-of-10 peers, while Treasury 10-year yields climbed two basis points to 4.12% after halting a five-day increase on Monday. Gold advanced.

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The sharp swings indicate just how sensitive markets have become to headlines from the Middle East conflict. Cross-asset volatility showed little sign of easing — with a market risk indicator hovering near levels seen when Trump unveiled global tariffs last year — as investors grappled with a fast-moving geopolitical conflict that offers no clear trading playbook.

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“What we’re seeing now is more of a relief rally after an extreme risk-off episode, rather than a genuine shift back into a full risk-on environment,” said Dilin Wu, a research strategist at Pepperstone Group.

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Even so, equity-index futures for US benchmarks slipped in early Asian trading, signaling the rebound may not hold. Contracts for the S&P 500 and the Nasdaq 100 were down 0.3%, having pared losses of as much as 0.6%.

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Trump’s comments at press conferences “haven’t been the most informative signal,” so investors would do well to remain skeptical, Eric Van Nostrand, a chief investment officer at Lazard Asset Management, said in a Bloomberg TV interview.

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“There’s a lot of misplaced confidence in markets right now that things will ease quickly as they have in previous episodes of elevated Middle Eastern tensions,” he said. “But I do think what we are seeing today, given the likely duration of closure of the Strait of Hormuz, is something quite different. It is going to affect the global economy really in a very meaningful and global way.”

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What Bloomberg strategists say…

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“The damage to economies goes well beyond the direct fallout from crude prices. Inflation shocks are coming, delivering stagflationary impulses as they weaken demand and push central banks toward more hawkish stances. The outlook for equities is much gloomier now than it was a month ago.”