Oil Rises, Asian Equities Fall as Trump Signals Further Military Strikes on Iran -- Update

By Ronnie Harui and Sherry Qin

Oil rose in Asia on Thursday after President Trump signaled further U.S. military strikes against Iran, renewing concerns over supply disruptions in the Middle East.

The comments weighed on risk appetite and pushed Asian equities lower.

In a primetime address, Trump said the U.S. is "going to hit them extremely hard over the next two to three weeks. We're going to bring them back to the stone ages, where they belong."

He described the war as an investment in the future for Americans and suggested the military operation could end within a month.

Trump also said allies that depend on Middle East oil that shipped through the Strait of Hormuz--which Iran has effectively shut--should "go to the strait and just take it, protect it, use it for yourselves."

The speech has undone the de-escalation trade, said four members of Westpac Strategy group in commentary. While Trump reiterated that the conflict could end within two to three weeks, the threat of escalation is still explicit, they said.

"If anything, the speech re-tables the threat of a more 'decisive final strike' before any unilateral disengagement," they said.

After dipping below $100 a barrel on Wednesday, oil prices rebounded.

Front-month West Texas Intermediate crude oil futures rose 4.5% to $104.61 per barrel, after falling as much as 2.6% earlier, while front-month Brent crude gained 5.4% to $106.60 a barrel.

Asian equity markets gave up early gains after Trump's speech.

Japan's Nikkei Stock Average fell 2.3%, South Korea's Kospi dropped 4.4%, and Hong Kong's Hang Seng Index lost 1.1%.

With the Middle East situation uncertain, Nomura analysts advised caution on Indian equities and, to a lesser extent, stocks in Indonesia and the Philippines, citing risks to growth and earnings. Malaysian, Hong Kong and Chinese markets are expected to be relatively resilient.

Precious metals also fell, with spot gold down 1.6% at $4,680.53 a troy ounce and spot silver falling 3.8% to $72.22 a troy ounce.

The dollar strengthened against most Asian currencies as economies braced for further energy supply disruption. The dollar rose 0.7% to 1,522.86 won and gained 0.4% at 159.37 yen.

U.S. stock futures declined, with eMini S&P 500 futures down 1.2%, eMini Nasdaq 100 futures losing 1.5% and eMini Dow futures 1.0% lower.

Write to Ronnie Harui at [e-mail] and Sherry Qin at [e-mail]

(END) Dow Jones Newswires

04-02-26 0051ET