Optimism for an end to the conflict in the Middle East, sooner rather than later, leads European stock markets to soar this Wednesday while oil brent It falls sharply and is trading below $100 a barrel. Following the bullish trail of the Asian stock markets, the Ibex 35, which has risen more than 3% in the early stages of the day, is advancing around 2.5%, in line with the behavior of the rest of the European indices, and is trading around 17,500 points. The dollar falls slightly and Treasury bonds continue their bullish streak after Trump’s comments.
A resolution is likely to restore investor confidence after the five-week conflict that roiled energy and stock assets, pushing some indices into correction territory. Focus will also be on policymakers’ response to rising energy costs and supply disruptions, their impact on the economy, and whether corporate results later this month reflect the pressure on growth.
“The prospects of the United States seeking detente may contribute to near-term risk appetite, as reflected in the past 24 hours,” said Tai Hui, chief Asia-Pacific market strategist at JPMorgan Asset Management. “However, we could still experience some volatility if the Trump Administration were to review its military strategy.”
Trump, who will address the nation to provide an “important update” on Iran, said the Islamic Republic could still reach an agreement with the United States. He added, however, that an agreement with Tehran is not a prerequisite for the war to end. Iran has “the necessary will to end this war,” but expects certain requirements to be met, “especially essential guarantees to prevent a repetition of aggression,” the President of the Islamic Republic, Masoud Pezeshkian, told EU Council President António Costa in a call on Tuesday.
“Markets are interpreting this as completely positive, in the sense that we see the end of the conflict,” said Nick Twidale, chief market analyst at AT Global Markets in Sydney. “Personally, I’m not convinced in the long term. I think we will have more news-driven volatility in the coming days, and investors will soon want concrete evidence that the end of the war is in sight,” Bloomberg reports.
On the Spanish stock market, all the Ibex 35 stocks, except Repsol, which lost 5%, are trading with significant gains. The largest revaluations are for IAG, Banco Santander, ArcelorMittal and ACS, which rose more than 5% each. They are followed, with profits above 3%, by Fluidra, Sacyr, Acerinox, BBVA, CaixaBank, Bankinter, Unicaja and Sabadell.
Profits in Asia
The Asian stock markets closed the first day of April with significant gains. Japan’s Nikkei soared 5.6% while in China, the Shanghai Composite rose 1.47%. For its part, the Hang Seng in Hong Kong gained 2.2% at the close. South Korea’s Kospi pocketed more than 8% on the relief.
All eyes will be on Trump’s address to the nation tonight about the conflict with Iran. Meanwhile, Iranian drones have continued attacking energy infrastructure in Persian Gulf countries this morning, specifically fuel tanks at the Kuwait International Airport. “In addition, the government of the United Arab Emirates (UAE) has declared that it is ready to help the United States and other allies to open the Strait of Hormuz by force,” explains Juan José Fernández Figares, director of analysis at Link Gestión that, “although it seems that things are going in the right direction in terms of reaching a possible ceasefire in the region, there is still much to do.”
In other segments of the market, gold rises for the fourth consecutive day to trade near $4,700 per ounce. Despite the rally in recent days, gold’s nearly 12% drop in March was its worst monthly result since October 2008.
The Bloomberg Dollar Spot Index falls 0.1%. The indicator rose 2.4% last month, with the dollar emerging as the preferred safe haven during the war. Treasuries extend their gains, with the yield on the benchmark 10-year bond falling four basis points to 4.28%, bringing this week’s decline to 15 basis points.
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