JAKARTA - The Asia-Pacific market moved in opposite directions on Tuesday amid wild trading. According to a CNBC report quoted on Tuesday, March 31, the market direction changed quickly after news emerged that US President Donald Trump wanted to avoid a prolonged war with Iran. The news immediately pressured oil prices, which had previously strengthened.
The Wall Street Journal, as quoted by CNBC, reported that Trump told his aides that he was willing to end the US military action against Iran even though the Strait of Hormuz was still not fully open. The main consideration is that the operation to open the route is considered to extend the war beyond the initial target, which is about six weeks.
Market response came quickly. WTI oil contracts for May fell 0.72 percent to 102.14 US dollars per barrel. Brent also weakened 1 percent to 111.55 US dollars per barrel. This means that the market is starting to read that there is a chance that the war will not be carried further, even though the risk has not disappeared.
Ben Emons of Fed Watch Advisors, quoted by CNBC, assessed that Trump could be forced to soften to hold down gasoline prices and inflation ahead of the midterm elections. He said the war has now turned into an unbalanced game: the US tends to want to end it, while Iran continues to charge a cost.
In Asia, the biggest pressure was seen in South Korea. The Kospi index fell 2.2 percent, Kosdaq weakened 1.9 percent, and the won fell 0.67 percent to 1,537.4 per US dollar, approaching its weakest point since 2009. In Japan, the Nikkei 225 fell 0.13 percent, but the Topix turned up 0.18 percent. Australia actually strengthened, with the S&P/ASX 200 up 0.9 percent. Hong Kong's Hang Seng fell 0.3 percent, while China's CSI 300 was almost motionless.
Still according to CNBC, the market remains overshadowed by the great risk in the Strait of Hormuz. This route was previously used by about a fifth of the world's oil shipments by sea. However, since the US and Israeli attacks on Iran on February 28, traffic in the area has almost stopped.
Last night on Wall Street, the S&P 500 fell 0.39 percent and the Nasdaq weakened 0.73 percent. Only the Dow Jones was still able to rise slightly 0.11 percent. The pressure came even though Fed Chairman Jerome Powell said the outlook for inflation was still under control and did not need to be answered with an interest rate hike.
But in the following trade, US stock futures began to strengthen. The market seems to be weighing in, the war is not over, but Washington is beginning to signal that it does not want to sink too deeply.
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