Jan 09, 2020: Asian equities rallied and safe-haven assets such as gold and the yen retreated Thursday as investors breathed a sigh of relief that tensions between the US and Iran were easing.
Traders rushed back into regional markets, tracking a positive lead from Wall Street, after the two sides dialled down their rhetoric following days of heightened tensions caused by the US assassination of Iran's top general last week.
Iran on Wednesday launched missile attacks on US targets in Iraq but there were no casualties and the strikes appeared intended to make a statement rather than kill.
Tehran later said it had “concluded” the attacks for now, while Foreign Minister Mohammad Javad Zarif tweeted that the country does “not seek escalation or war”.
Donald Trump announced that “Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world”.
“With President Trump delivering a benign White House address, and in the absence of any further Iranian retaliation, this geopolitical fracas could fade away,” said AxiTrader's Stephen Innes.
Oil prices, which spiked briefly to four-month highs Wednesday soon after the Iranian attack, dropped back below their start point on the softer tone from both sides, while markets rallied.
– Time to refocus' –
The Nasdaq hit another record while the Dow and S&P 500 enjoyed big gains.
And the positive mood continued into Asia. Hong Kong jumped more than one percent, Shanghai and Sydney each piled on 0.9 percent, while Tokyo went into the break two percent stronger.
Seoul and Taipei also added more than one percent, Singapore and Manila both rose 0.3 percent and Jakarta was up 0.5 percent.
The rush to riskier investments saw safe-haven gold sink more than one percent, having broken $1,600 for the first time since 2013, while the yen lost around 1.4 percent against the dollar since its Wednesday highs.
Oil prices edged up Thursday on bargain-buying.
“Assuming Iran-US tensions continue to simmer rather than boil, markets are likely to refocus on the global growth outlook and on trade, with the interim US-China trade deal expected to be signed on 15 January,” said National Australia Bank's Tapas Strickland.
The lowering of tensions will allow traders to turn their attention to the release Friday of US jobs data, which will provide the latest snapshot of the world's number one economy, with recent figures indicating it remains robust.
Also in focus is the upcoming earnings season, which kicks off this month.
– Key figures at 0230 GMT –
- Tokyo – Nikkei 225: UP 2.0 percent at 23,677.81 (break)
- Hong Kong – Hang Seng: UP 1.2 percent at 28420.86
- Shanghai – Composite: UP 0.9 percent at 3,094.82
- Pound/dollar: UP at $1.3112 from $1.3095 at 2200 GMT
- Euro/pound: DOWN at 84.77 pence from 84.79 pence
- Euro/dollar: UP at $1.1118 from $1.1105
- Dollar/yen: UP at 109.22 from 109.13 yen
- Brent Crude: UP 46 cents at $65.90 per barrel
- West Texas Intermediate: UP 47 cents at $60.08
- New York – Dow: UP 0.6 percent at 28,745.09 (close)
- London – FTSE 100: FLAT at 7,574.93 (close)