Sources told Reuters that both sides had left the door open to talks and a US official said follow-up was underway to try to reach an agreement.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1% in early Asia trading, while Japan’s Nikkei and South Korea’s KOSPI each rose more than 2%.
Nasdaq futures rose 0.13% after overnight gains on Wall Street, while S&P 500 futures were steady, while Eurostoxx 50 futures rose 0.63% and DAX futures rose 0.77%.
“The market is trading in hope, not solutions,” said Charu Chanana, chief investment strategist at Saxo.
“The weekend’s failed talks produced no deal, but they also didn’t close the door to diplomacy, and that’s enough to push equities yet higher.”
US President Donald Trump said on Monday that Iran “called this morning” and “they would like to work on a deal”. Reuters could not immediately verify the claim. Meanwhile, the US military started a blockade of Iran’s ports with the aim of putting pressure on Tehran.
Trump has said that Washington will block Iranian ships and any ships that pay such tolls and that any Iranian “fast-attack” ships that go too close to the blockade will be turned away.
“Really the U.S. played that trump card. It’s important to me because they put the onus on Iran to open the strait without having to put it on the ground,” said Tony Sycamore, market analyst at IG.
“Now this has forced the Iranians back to the drawing board.”
Oil prices fell as hopes for a resolution outweighed concerns about supply disruptions, sending Brent crude futures down 2.7% to $96.66 a barrel. US crude futures fell 3% to $96.13 a barrel.
dollar on the back foot
The dollar fell to a 1-1/2 month low of 98.328 against a basket of currencies on Tuesday, as rising risk-off sentiment sapped demand for the world’s reserve currency.
That sent the euro up 0.05% to trade at $1.1764, while sterling hit a more than six-week high of $1.3514.
“The US and Iran have started to move down the path to reaching an agreement,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia.
However, “the market is still facing a global economic outlook that is deteriorating, and I think the risk is high that you’ll get equity markets and credit markets and so on down again, and that will probably push the US dollar higher against all currencies.”
US Treasury yields were little changed, with the two-year yield at 3.7722% while the benchmark 10-year yield was at 4.2854%. [US/]
The inflation pulse from a sharp rise in energy prices has prompted investors to brace for the possibility that several major central banks will lean toward raising rates, marking a sharp reversal from pre-war expectations of a rate cut or a prolonged pause.
Elsewhere, spot gold was up 0.7% at $4,771.81 an ounce. [GOL/]
Cryptocurrency Bitcoin rose 1.5% to about $74,312.