(Sharecast News) - Asia-Pacific markets mostly rose on Tuesday as investors weighed tentative hopes for a renewed US-Iran agreement against ongoing geopolitical tensions, while oil prices retreated despite continued disruption in the Strait of Hormuz.
Patrick Munnelly, market strategy partner at TickMill, noted that "stocks saw an upswing while oil prices took a dip following president Donald Trump's suggestion to reopen talks with Iran, sparking optimism for a potential agreement that might alleviate tensions in the Middle East."
The fragile ceasefire between Washington and Tehran remained in place but was significantly strained, with both sides accusing each other of breaching its terms.
The US said on Monday it had started blocking ships from entering or exiting Iranian ports in the Strait of Hormuz from 1000 EDT, aiming to pressure Tehran to reopen the critical oil route after peace talks collapsed.
Iranian officials warned the move would drive global energy prices higher, with parliamentary speaker Mohammad Bagher Ghalibaf stating: "Enjoy the current pump figures. With the so-called 'blockade', Soon you'll be nostalgic for $4 - $5 gas."
Munnelly added that "the blockade is seen as a strategic move to limit Iran's oil revenues while ensuring secure shipping routes, which reinforces hopes that energy supplies might eventually stabilise."
Oil prices declined, with Brent crude futures last down 0.41% on ICE at $98.95 per barrel, while the NYMEX quote for West Texas Intermediate dropped 1.96% to $97.14, with Munnelly noting that "Brent crude oil fell by 1.5% to $97.90 per barrel amid indications that Washington and Tehran might be on the verge of resuming negotiations."
He added that "the dollar weakened against most major currencies, while Treasuries gained ground as the easing oil prices alleviated inflation worries."
Bourses rise across the region
In Japan, the Nikkei 225 jumped 2.43% to 57,877.39, supported by strong gains in technology and investment stocks, with SoftBank Group surging 12.7%, Advantest rising 8.52% and Renesas Electronics up 7.96%.
The broader Topix index added 0.87% to 3,755.27, with Munnelly highlighting that "technology stocks played a pivotal role in this market movement, with MSCI's Asia Pacific tech index soaring by 4.2%," and noting that "companies like Kioxia experienced a remarkable 15% increase in Tokyo."
Chinese equities also advanced, with the Shanghai Composite rising 0.95% to 4,026.63 and the Shenzhen Component gaining 1.61% to 14,639.95.
Zhejiang HangKe Technology climbed 10.19%, Beijing North Star rose 10.11% and Harbin Pharmaceutical Group added 10.08%.
However, data showed China's export growth slowed to 2.5% year-on-year in March, missing a Reuters forecast of 8.6% and marking the weakest pace in six months, as higher commodity and energy costs linked to Middle East disruptions weighed on manufacturers.
It compared with a combined 21.8% increase in the first two months of the year, while imports recorded their fastest expansion in more than four years.
Hong Kong's Hang Seng Index gained 0.82% to 25,872.32, led by Pop Mart International, up 6.53%, JD Logistics, which rose 5.75%, and Longfor Properties, up 5.74%.
South Korea's Kospi 100 outperformed the region, rising 3.11% to 6,898.23.
Mirae Asset Daewoo Securities jumped 10.87%, SK Square gained 10.34% and Hanwha Solutions advanced 6.84%, with Munnelly noting that "South Korea's Kospi climbed 3.4%, buoyed by improved sentiment that helped the S&P 500 recover from losses tied to geopolitical strife."
Sydney makes modest gains, Wellington in the red
In Australia, the S&P/ASX 200 rose 0.5% to 8,970.80, with IperionX up 10.27%, Capstone Copper gaining 6.39% and Paladin Energy climbing 6.28%.
However, sentiment data highlighted growing economic concerns, as National Australia Bank's business confidence index plunged 29 points to -29 in March, one of the steepest monthly declines on record, comparable to falls seen during the 2008 financial crisis and the onset of the Covid-19 pandemic.
Business activity remained resilient at +6, but surveys indicated that the oil-driven shock could push the economy towards recession as policymakers considered further rate increases to contain inflation.
Across the Tasman Sea, New Zealand's S&P/NZX 50 edged 0.02% lower to 13,017.26, with KMD Brands down 2.9%, A2 Milk Company falling 2.75% and Synlait Milk declining 2.38%.
Dollar weakens against regional peers
Currency markets showed modest dollar weakness, with the greenback falling 0.37% on the yen to trade at JPY 158.86, as it slipped 0.33% against the Aussie to AUD 1.4048, and dropped 0.48% on the Kiwi to change hands at NZD 1.6961, in line with Munnelly's observation that "the dollar weakened against most major currencies" as easing oil prices reduced inflation concerns.
Reporting by Josh White for Sharecast.com.
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