Stocks declined and oil rose as optimism over the US-Iran ceasefire faded after Tehran said several terms of the agreement had been breached, highlighting lingering uncertainty in markets.
MSCI’s Asia Pacific equity gauge fell 0.9 per cent after Iranian Parliament Speaker Mohammad Bagher Ghalibaf said three clauses of the ceasefire proposal have been contravened so far. Two shares fell for every one that advanced in the index. Stock futures for Wall Street and European benchmarks fell 0.2 per cent, indicating a four-day run of gains for global stocks is primed to end.
Stocks surged globally on Wednesday — with the Asian index jumping the most in a year — on optimism the ceasefire deal would help ease the flow of oil through the Strait of Hormuz and support economic growth. Weighing on the mood was Brent crude, which rose 2 per cent to about $97 a barrel — rebounding from its worst plunge in more than six years — with little traffic passing through the strait.
Treasuries were steady after wiping out an early rally in the US session. Government bonds in Japan and Australia also retreated on concern higher oil prices will fan inflation.
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The whipsaw trading shows how tentative sentiment remains after a cross-asset relief rally sparked by Washington’s pledge to halt strikes on Iran for two weeks and pursue talks with the Islamic Republic. Israeli attacks in Lebanon and the continued effective closure of the Strait of Hormuz — a key artery for crude oil flows from the Middle East — threaten to derail the ceasefire and stall equity gains.
“The fragility of the ceasefire is already being tested with reports Iran closed the Strait of Hormuz in response to attacks on Lebanon by Israel,” Peter Dragicevich, an Asia Pacific currency strategist at Corpay Solutions in Sydney, wrote in a note. “The situation in the Middle East has relatively improved, but things remain fluid and given the volatile participants involved it could deteriorate at any time.”
In other corners of the market, a Bloomberg gauge of the dollar edged up 0.1 per cent, while Bitcoin dropped 0.5 per cent to around $71,000. Gold fluctuated to trade around $4,700 an ounce.
Asian technology stocks followed US peers lower after Meta Platforms Inc. unveiled a new artificial intelligence model and Anthropic launched Claude tools for building agents.
Meanwhile, US president Donald Trump said all ships, aircraft and military personnel will remain in and around Iran, until such time “as the real agreement reached” is fully complied with.
Sporadic fighting continued throughout the Middle East, including in Lebanon, where Israel continued its campaign against the Iran-aligned Hezbollah militia. Iranian officials cast that as violating the terms of the less than a day-old ceasefire.
“Much will depend on adherence to the ceasefire and progress in negotiations, and it will be difficult to return to the pre-conflict status quo,” said Yiping Liao, a portfolio manager at Templeton Global Investments. “While this may mark a floor for further escalation, risks remain elevated.”
Traders are still focused on the Strait of Hormuz and whether energy flows will resume through the waterway.
The strait remained largely blocked on Wednesday, as shipowners try to understand if they can safely transit the vital waterway following a fragile ceasefire between the US and Iran that was announced overnight. Just three ships were observed leaving the region on Wednesday, according to ship-tracking data compiled by Bloomberg.
“The trouble with ceasefires is that they often require both sides to agree to a set of terms, and then actually cease fire,” said Molly Schwartz, a cross-asset macro strategist at Rabobank. “However, if the set of terms are not comprehensively established and neither side can be held accountable to pause hostilities, then the so-called ‘ceasefire’ loses all meaning.” - Bloomberg
