SINGAPORE, April 1 - Asian equities and sovereign bonds pushed higher at the start of trading on Wednesday, while the U.S. dollar softened, as markets digested comments pointing to a potential reduction in hostilities between the United States and Iran and a batch of stronger-than-expected economic data for March that buoyed Korean and Japanese stocks.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 2.7%, ending a four-day slide as South Korea's Kospi jumped as much as 5.5% in early trade. Japan's Nikkei 225 also rallied, rising as much as 3.9% at one stage. The moves followed remarks from U.S. President Donald Trump that the United States could halt its military attacks on Iran within two to three weeks and that Tehran would not necessarily need to strike a formal deal for the conflict to begin winding down.
Investors seized on the prospect of talks continuing between the two sides. Rodrigo Catril, a currency strategist at National Australia Bank in Sydney, said markets were taking comfort from the fact that both parties were engaging in discussions. "They're still quite far apart in terms of what a truce means, or what peace means, but the market is embracing the fact that they are talking," he said on a podcast. He cautioned that whether a compromise can be reached remained uncertain, and noted that exchanges of attacks were still occurring.
White House spokeswoman Karoline Leavitt said on X that President Trump would give an update on Iran in an address to the nation at 9 p.m. on Wednesday - 0100 GMT on Thursday. In U.S. derivatives markets, S&P 500 e-mini futures rose 0.3% and Nasdaq futures gained 0.5% after the post.
Wall Street had posted strong gains on Tuesday as traders priced in the possibility of an off-ramp to the conflict, with the S&P 500 finishing 2.9% higher. Oil traded more modestly when Asian markets reopened: Brent crude futures were up 1.1% at $105.16 a barrel, retracing some of the prior session's decline.
Regionally, South Korean equities led the rally. Samsung Electronics surged 8% and SK Hynix jumped 7.8%, supported by a surprise spike in export volumes: exports rose 48.3% year-on-year in March, far exceeding expectations. A separate purchasing managers' index for the country showed factory activity expanded at the strongest pace in more than four years in March, with respondents pointing to demand in semiconductors and new product rollouts as key drivers.
In Japan, a widely watched survey showed business sentiment among large manufacturers improved in the three months to March. The uptick in sentiment suggested that heightened economic uncertainty stemming from the Middle East conflict had not yet eroded corporate morale.
Currency and fixed income markets showed more muted moves. The U.S. dollar index, which measures the greenback against a basket of six major currencies, ticked up 0.1% to 99.8070 after recording its largest one-day drop since March 19 on Tuesday. Market participants repriced the chances of earlier Federal Reserve policy easing: Fed funds futures implied a 32% probability of a 25-basis-point rate cut at the Federal Reserve's two-day meeting ending on July 29, compared with a 7.5% probability a day earlier, according to the CME Group's FedWatch tool.
The yield on the U.S. 10-year Treasury fell 1.2 basis points to 4.297%.
Cryptocurrencies were mixed to slightly lower in early Asian trading. Bitcoin slipped 0.3% to $67,988.87, while ether fell 0.2% to $2,100.94.
Context and market implications
The combination of easing geopolitical anxieties and robust March economic readings in key Asian manufacturing hubs helped restore risk appetite. Export- and technology-linked sectors benefitted most visibly, with semiconductor-related names seeing outsized gains after the export and PMI data from South Korea.