HK buoyed as regionals rise on blockade ‘trump card’

Asian stocks advanced while oil prices and the safe-haven US dollar fell on Tuesday as the United States said it was continuing to engage with Tehran to make a deal even as it blocked Iran’s ports after the collapse of peace talks over the weekend.

In Hong Kong, the benchmark Hang Seng Index opened up 268 points, or 1.05 percent, at 25,929.

The China enterprises index was up 72 points, or 0.8 percent, at 8,674 while the tech index was up 66 points, or 1.4 percent, at 4,888.

Across the border, the benchmark Shanghai Composite Index opened up 18 points, or 0.46 percent, at 4,006.

The Shenzhen Component Index was 106 points, or 0.74 percent, higher at 14,514 while the ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, was up 30 points, or 0.88 percent, at 3,507.

Sources said both Washington and Tehran have left ⁠the door open to dialogue, and a US official said there was forward motion on trying to get to an agreement.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1 percent in early Asia trade.

The 225-issue Nikkei Stock Average opened up 582 points, or 1.03 percent, before its gains widened to 1,416 points, or 2.51 percent, pushing the benchmark to 57,919 at one point before noon.

In Seoul, the Korea Composite Stock Price Index opened up 151 points, or 2.61 percent, at 5,960. The Kospi gained 185 points, or 3.19 percent, to 5,993 at one point before midday.

Nasdaq futures advanced 0.13 percent while S&P 500 futures held steady, following an overnight rally on Wall Street, while Eurostoxx 50 futures gained 0.63 percent and DAX futures added 0.77 percent.

“Markets are trading hope, not resolution,” said Charu Chanana, Saxo’s chief investment strategist.

“The failed weekend talks did not produce a deal, but they also did not close the door on diplomacy, and that is enough ⁠for equities to keep pushing higher for now.”

US President Donald Trump said on Monday that ⁠Iran had “called this morning” and “they’d like ⁠to work a deal”.

The US military meanwhile began a blockade of Iran’s ports in a move aimed at putting pressure on Tehran.

“The US has actually played that trump card. To me it’s important because they forced the onus ‌back on Iran to open the Strait without the need to put those boots on the ground,” said Tony Sycamore, a market ⁠analyst at IG.

“It’s now forced the Iranians back to the drawing board.” (Reuters & Xinhua)