US President Trump revealed on Tuesday (March 24th) in the Oval Office at the White House that the US and Iran are “in talks,” a statement that significantly eased concerns in the markets over escalating tensions in the Middle East. Encouraged by this, stock markets in the Asia-Pacific region opened strong on Wednesday, while international oil prices saw a significant drop as war risk premiums receded.
Trump said during the conversation that Iran seems eager to reach a peaceful agreement, and mentioned that he had changed his previous stance on attacking Iran’s energy facilities.
Furthermore, Trump stated that Iran has agreed to never possess nuclear weapons. This is the primary demand put forward by the US to end the conflict.
“They have already agreed,” Trump said, “they will never have nuclear weapons. They have agreed to that. In fact, we have found the right negotiating partner, they are very keen on reaching an agreement, you can’t imagine how much they want to reach an agreement.”
At the same time as Trump made these remarks, the US military has been stepping up military deployments in preparation for the breakdown of negotiations. However, market sentiment has turned optimistic.
The energy markets reacted sharply, with West Texas Intermediate (WTI) crude oil futures falling by 3.92% during the Asia-Pacific trading session on Wednesday, to $88.73 per barrel.
Spot gold also rose by 0.7% to $4,507.65 per ounce.
Rebecca Babin, a senior energy trader at CIBC’s Private Wealth Management Group, pointed out: “In this market driven by headline news, oil remains the leading indicator. Reports of a possible 30-day ceasefire agreement in the making are easing market expectations of the worst-case scenario.”
In terms of stock markets, the Australian S&P/ASX 200 index opened with gains of over 1.26%. The Japanese Nikkei 225 index surged by 2.98%, the South Korea KOSPI index also rose by 2.47%, and the Taiwan Weighted Index opened with a rise of over 2.8%.
In US stock futures trading, S&P 500 index futures and Nasdaq 100 index futures rose by 0.7% and 0.8% respectively, while Dow Jones Industrial Average futures increased by approximately 318 points.
Washington’s diplomatic efforts are underway on multiple fronts. According to The New York Times, the US has presented Iran with a “15-point plan,” and Israeli media reports suggest that the US is seeking a one-month ceasefire agreement.
Trump mentioned that Secretary of State Rubio, Vice President Vance, and the envoy have all been involved in the negotiations.
However, while diplomatic efforts are being pushed forward, the US military remains on high alert. It is believed that the US is deploying approximately 3,000 soldiers from the 82nd Airborne Division to the Middle East.
Despite the diplomatic gestures, experts caution that risks have not been completely eliminated. Matt Maley from Miller Tabak stated, “Everything depends on whether the Hormuz Strait reopens. So, even if we hear this weekend that negotiations ‘are progressing well’, it is not enough if the strait remains under strict restrictions.”
Currently, the markets are closely monitoring the high-level peace dialogue expected to take place as early as Thursday, and awaiting an official response from Tehran.
In addition to geopolitical risks, financial markets are also facing internal pressures.
Signals of liquidity tension continue to emerge in the private credit sector, with two giants – Ares Management and Apollo Global Management – restricting investors from redeeming funds from their portfolios, indicating a growing pressure on the $1.8 trillion private credit market.