By Ronnie Harui
Asian equities and government bonds rose Thursday after President Trump said negotiations with Iran were advancing, spurring hopes of a deal to end the conflict.
Meanwhile, three tankers passed through the Strait of Hormuz, a key waterway through which one-fifth of the world's oil is typically transported, which facilitated Wednesday's decline in crude oil prices and bolstered market sentiment.
The main theme has been risk-on, Commerzbank Research analysts said in a note. The overnight drop in oil prices has "eased inflation fears, lifted market sentiment and triggered a broad rally across equities and bonds," the analysts added.
Stock markets across Asia climbed, with Japan's Nikkei Stock Average rising 3.3%, South Korea's Kospi gaining 5.8% and Australia's S&P/ASX 200 benchmark index adding 1.3%
Government bonds in the region also rose in price terms. Yields on Japan's 10-year government bond fell 2 basis points to 2.765%, those on Australia's 10-year sovereign securities dropped 7 basis points to 5.0020%, while yields on New Zealand's 10-year government bond declined 7 basis points to 4.7390%. Bond yields move inversely to prices.
There are "hopes for a deal to end a war that has rattled financial markets and fueled inflation worries," UOB Global Economics & Markets Research said.
Meanwhile, front-month crude oil futures rose Thursday in Asia on a likely technical recovery after posting back-to-back losses on Wednesday. Front-month West Texas Intermediate crude oil futures advanced 0.7% to $98.97 per barrel and front-month Brent crude oil futures gained 0.6% to $105.68 a barrel, ICE data showed.
Write to Ronnie Harui at ronnie.harui@wsj.com
(END) Dow Jones Newswires
05-20-26 2143ET
