Trump’s repeated threats to destroy civilian infrastructure including power plants and bridges if the vital waterway is not open by Tuesday have put traders on edge for reciprocal attacks by Iran on targets in the Gulf states.
With liquidity thin as many countries around the region observed holidays on Monday, S&P 500 e-mini futures sank 0.2 percent, while MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 percent.
In Tokyo, the 225-issue Nikkei Stock Average opened 82 points, or 0.2 percent, up at 53,205, and its gains accelerated to put the benchmark 880 points, or 1.7 percent, up at one point just before midday.
In Seoul, the Korea Composite Stock Price Index opened up 46 points, or 0.9 percent, at 5,423. The Kospi was up 125 points, or 2.3 percent, to 5,503 at one point before noon.
Brent crude futures opened higher, rising 1.4 percent to US$110 a barrel after members of the Opec+ agreed on Sunday to raise its oil output quotas by 206,000 barrels per day for May.
However, the increase will exist only on paper for several major producing countries behind the Strait of Hormuz that have sustained damage to oil production facilities and transport infrastructure since the war started.
“This week will continue to be dominated by developments in the Middle East, though a heavy slate of data releases – including the FOMC March minutes, February personal income, and March CPI – will compete for attention,” said Yardeni Research president and chief investment strategist Ed Yardeni, referring to the Federal Open Market Committee which sets US monetary policy.
“Trump warned Iran that unless the strait is opened immediately, Monday will be obliteration day, when the US will bomb Iran’s electric power plants,” he wrote in a research report.
On Friday, the S&P 500 closed up 0.1 percent after the US jobs report showed employment growth rebounded more than expected in March, with a 178,000 increase in non-farm payrolls representing the biggest increase in more than a year. The unemployment rate fell to 4.3 percent from 4.4 percent, as people dropped out of the workforce.
The data complicates the picture for the Federal Reserve, which will next decide on monetary policy at a two-day meeting ending on April 29.
However, swaps pricing indicates the market is expecting no moves at all from the US central bank until September 2027, according to the CME Group’s Fedwatch tool. (Reuters & Xinhua)
Edited by Cecil Wong
