By Stella Qiu
SYDNEY, April 15 (Reuters) – Asian stocks tracked Wall Street higher on Wednesday as hopes for a resumption of U.S.-Iran peace talks capped oil prices at under $100 a barrel, while the dollar steadied after seven days of losses.
But European markets were bracing for a more muted open, with pan-region futures down 0.2%, and FTSE futures little changed. Wall Street futures were flat after a strong rally on Tuesday.
President Donald Trump said talks with Iran could resume in Pakistan over the next two days, after the collapse of weekend negotiations prompted Washington to impose a blockade on Iranian ports. Pakistani and Iranian officials also said negotiations could restart.
Signs that diplomatic engagement would continue helped calm markets. Brent crude futures bounced 1% to $95.77 a barrel, having slumped almost 5% overnight to trade below $100.
Stock investors cheered, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 1.5% to hit the highest level in six weeks. Japan’s Nikkei climbed 0.9%% while South Korea’s KOSPI rallied 3%.
Chinese blue-chips rose 0.2% and Hong Kong’s Hang Seng index gained 0.7%.
“It seems fairly clear at this stage that neither side is seeking to escalate the situation further, from a kinetic perspective, with it also increasingly obvious that the U.S. blockade of the Strait of Hormuz is a negotiating gambit,” said Michael Brown, senior research strategist at global online broker Pepperstone.
“That ‘direction of travel’ remains, by and large, towards some sort of US-Iran peace deal being done.”
Overnight on Wall Street, the Nasdaq climbed 2% to chalk up its 10th straight day of gains and the S&P 500 flirted with a record closing high. U.S. producer inflation data also provided some encouragement as prices rose by less than economists expected in March, helping temper fears around war-driven inflation.
Investor optimism that the Iran war may wind down soon also supported Treasuries, which have taken a beating recently on inflation worries.
The two-year U.S. Treasury yield slipped 1 basis point (bp) to 3.746% on Wednesday, having fallen 3 bps overnight. The 10-year yield was also down 1 bp at 4.2439%, after dropping 4 bps overnight.
The safe-haven U.S. dollar stabilised after falling for a seventh straight session overnight. The euro held steady at $1.1791, having hit a six-week top of $1.1811 overnight.
Gold prices slipped 0.3% to $4,824 an ounce.
With the flow of oil still effectively cut off through the Strait of Hormuz, the International Monetary Fund on Tuesday lowered its growth outlook and warned that the global economy would teeter on the brink of recession if the conflict worsens.
(Reporting by Stella Qiu; Editing by Kevin Buckland and Kim Coghill)
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