Asian stocks rise on Middle East peace deal hopes

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 3.8 per cent

Asian stocks joined a global rally on June 12 on hopes a Middle East peace deal may finally materialise oil prices dropped to two-month lows, tempering inflation fears.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 3.8 per cent, led by an 8.15 per cent surge in Kospi index. Nikkei increased 3.3 per cent while Hang Seng advanced 2 per cent.

Straits Times Index joined the rally, up 0.6 per cent at the midday trading break, after rising as much as 1.1 per cent in the morning.

Elsewhere, U.S. stock market rallied with the country’s three major indexes registering their biggest daily gains since April 8 when Iran and US agreed to a temporary ceasefire. The Nasdaq rallied 2.5 per cent, helped by expectations of a strong market debut of Elon Musk’s SpaceX.

Nonetheless, this does look perhaps a bit more tangible than we have had, said Ray Attrill, head of FX strategy at the National Australia Bank.

If we hear something from Iran that sounds positive, the odds of a peace deal are clearly going to flip quite dramatically, Attrill said.

The deal, if confirmed, would be the most significant diplomatic breakthrough yet to end the three-month-old war, which has sent energy prices worldwide sharply higher. The European Central Bank had to raise interest rates for the first time in nearly three years to nip war-driven inflation in the bud.

Oil prices plunged to two-month lows on the news of a possible peace deal before trimming some of the losses. The international oil benchmark Brent declined 1.1 per cent to $89.40, having dropped nearly 3 per cent overnight.