Japanese and South Korean shares rose on Monday as several key Asian markets were closed for holidays and investors were watching developments in the Middle East conflict.
President Donald Trump on Sunday issued a new round of threats to attack Iran’s power plants and civilian infrastructure starting Tuesday if Tehran fails to fully reopen the Strait of Hormuz, a key oil route through which about a fifth of the world’s oil supplies pass, before the regional war broke out on February 28.
In a profanity-laced social media post, Trump vowed to bring “hell” to Iran after US forces rescued an American airman in Iran last week. He later announced the deadline as “Tuesday at 8 p.m. ET” without elaborating. The White House told MS NOW on Sunday that the date is the new deadline for Iran to reach a deal with the US.
Trump said he would hold a news conference “with the military” in the Oval Office at 1 p.m. on Monday.
Iran, however, rejected Trump’s ultimatum to reopen the Strait of Hormuz, saying the key waterway would only be fully reopened after war damage was repaired. Tehran continued its attacks on economic and infrastructure targets in the neighboring Gulf region, including the Kuwaiti oil hub.
Signaling progress in peace talks, Axios reported that Washington and Tehran were engaged in talks brokered by some Gulf states on a potential 45-day truce that could end the conflict, although the prospect of a partial deal before Tuesday’s deadline was slim.
“The question is whether a more favorable outcome can be achieved without another round of exchanges potentially narrowing the way to a lower-intensity conflict in the medium term,” said Homin Lin, senior macro strategist at Lombard Odier, adding that investors would be wary of headline-to-headline trading.
If Trump continues to target Iran’s power grid and civilian infrastructure, risky assets could face another downturn, Lin added. “As long as the anxious wait for clarity on Iran’s endgame continues, markets are likely to remain volatile.”
Japan’s Nikkei 225 extended trading gains to rise 1.2% and the broad-based Topix rose 0.6%. South Korea’s Kospi, the leading blue-chip index, rose 0.8%, while the small-cap Kosdaq fell 1.7%.
Many markets in Asia were closed on Monday for a holiday, as Australia, New Zealand and Hong Kong celebrate Easter, while mainland China and Taiwan celebrate the Qingming Festival, a grave-cleaning holiday.
