Oil Drops on Iran De-Escalation Hopes, While Stocks Rise. – Asia Market Wrap

Equities rose and oil fell as US diplomatic efforts fuelled cautious hope that the Middle East conflict may be resolved, easing concerns about long-term disruptions.

Brent crude fell 4.4% to $99.92 per barrel, powering a 1.8% rise in Asian shares and gains in government bonds, as the possibility of lessening tensions in Iran reduced inflation concerns and dampened expectations for policy tightening. Equity-index futures for the US rose, while contracts indicated a more than 1% increase in European markets at the open. The Dollar edged down.

A 15-point US strategy aimed at ending the war with Iran fuelled confidence. Earlier, Israel’s Channel 12 reported that Washington wanted a one-month cease-fire. Despite this, attention remained focused on the Strait of Hormuz, a critical route for Middle Eastern oil shipments that is virtually closed to ships.

In other market news, gold increased for the second day in a row to over $4,555 per ounce, while Bitcoin advanced to around $71,000.

Yields on policy-sensitive two-year Treasury notes declined 2 bps to 3.87%.