Hong Kong stocks rebound after oil falls as Trump says Iran war could end soon
US objectives in Iran are ‘pretty well complete’ but the war could continue if Tehran attempted to stop global oil supplies, Trump says
The Hang Seng Index rallied 2.2 per cent to close at 25,959.90, its best single-day performance since February 23. The Hang Seng Tech Index surged 2.4 per cent. On the mainland, the CSI 300 Index rose 1.3 per cent and the Shanghai Composite Index edged up 0.7 per cent.
Brent crude oil fell as much as 11 per cent to US$88.05 a barrel after Trump said that the US objectives in Iran were “pretty well complete” and the war would end soon. Still, he hinted that the worst fighting could still be ahead if Iran attempted to stop global oil supplies. West Texas Intermediate oil traded as low as US$84.43 after a decline by the same magnitude.
“Both the broader market and tech stocks have accumulated significant declines recently, so when market conditions rebound, they will have ample momentum,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International.
The rebound underscores how risk assets are sensitive to fluctuations in crude oil, which is widely used as an industrial raw material and as a transport fuel. Crude above US$100 a barrel quickly raised concerns about stagflation and led investors to reassess the pricing of risk assets. Global inflation would rise 0.7 percentage point and growth would be cut by 0.4 percentage point if crude prices persist above US$100, according to economists.
Some analysts, including Morningstar’s Lorraine Tan, said that the rebound should be treated with caution, as the US had yet to give full details on how it would end the Middle East war and reopen the Strait of Hormuz.