Asia Opens Higher as US-Iran Deal Optimism Lifts Sentiment

GLOBAL MOOD: Cautiously Risk-On
Drivers: US-Iran Deal Hopes 

Asian equity markets edged higher in early Thursday trading as growing optimism around a potential US–Iran deal supported risk appetite, even as Washington maintained pressure on Tehran. Regional equities extended gains for a third consecutive session, with Japan’s Nikkei rising 1.5% and broader Asia-Pacific markets advancing modestly. Positive cues from US futures also aided sentiment, while investors remained focused on upcoming economic data and key earnings releases for further direction. 

TODAY’S WATCHLIST
 - ECB Lagarde Speech
 - Fed Williams Speech
 - Jan-Mar Earnings: HDFC Life, Wipro 

THE BIG STORY
Iran has signalled a potential breakthrough in negotiations with the US by indicating it could allow ships to pass through the Omani side of the Strait of Hormuz without interference, provided a broader deal is reached to prevent renewed conflict. The proposal is significant given the strait handles nearly 20% of global oil and LNG flows and has been at the centre of the largest disruption to energy supplies in recent history. Allowing partial access could serve as an interim confidence-building measure while negotiations continue.

US President Donald Trump has expressed optimism that the war is nearing its end, even as the US maintains pressure through a naval blockade and signals potential secondary sanctions on buyers of Iranian oil. Diplomatic efforts are intensifying, with Pakistan playing a central mediation role and both sides considering a return to talks in the coming days. The dual-track approach of negotiation and pressure reflects an attempt to accelerate a resolution while retaining leverage.

For markets, the focus is shifting from outright disruption to the structure of a potential settlement. Partial reopening of Hormuz could ease supply constraints and stabilise oil prices, but the situation remains fluid, with traffic still well below normal levels. The outcome of upcoming talks will be critical in determining whether the current de-escalation momentum can translate into a durable agreement.

Data Spotlight 
US import prices increased 0.8% month-on-month and 2.1% year-on-year in March 2026, reflecting continued cost pressures, particularly from fuel prices which rose 2.9%. Export prices also climbed 1.6% month-on-month and 5.6% year-on-year, marking the strongest annual increase since November 2022, signalling persistent external price strength.

On the activity side, manufacturing showed improvement, with the Empire State Index rising sharply to 11, indicating expanding output, new orders and employment.

In contrast, housing remains a weak spot, with builder confidence falling to 34, the lowest since September 2025, amid soft demand and continued price cuts. Energy data presented mixed signals, with crude inventories declining by 0.9 million barrels, while gasoline and distillate stocks saw sharp draws of 6.3 million and 3.1 million barrels, respectively, pointing to firm product demand.

Takeaway:
External price pressures and improving manufacturing contrast with persistent weakness in housing, highlighting an uneven economic landscape with pockets of resilience.

WHAT HAPPENED OVERNIGHT

• US stocks hit record highs as tech rally and diplomacy hopes drive gains
  • S&P 500 gained 0.8%, crossing fresh record highs above 7,020, while Nasdaq surged over 1.4%.
  • Nasdaq logs best 11-day stretch in history, led by strong tech momentum.
  • Broadcom rose over 3% and Meta gained nearly 2% on AI chip deployment partnership.
  • Tesla jumped over 7% on software updates and progress on AI5 chip.
  • Sentiment supported by expectations of de-escalation in West Asia conflict.
  • Donald Trump signals war could be nearing an end, boosting risk appetite.
  • Financials were strong, with Bank of America up 2.5% and Morgan Stanley gaining over 5% on earnings.

• US Treasury yield edge higher but remain near lows on easing risk premium
  • The 10-year yield rises to 4.27% after recent declines, staying near one-month lows.
  • Yields supported by fading geopolitical risk premium as US–Iran talks progress.
  • Donald Trump signals conflict nearing resolution, reinforcing de-escalation expectations.
  • Oil prices remain below recent highs, helping ease inflation concerns.
  • Markets continue to price stable policy, with Fed expected to hold rates this year.
  • Chicago Fed’s Austan Goolsbee flags potential delay in rate cuts if energy-driven inflation persists.

• US Dollar edges lower as diplomacy optimism caps safe-haven demand
  • The US dollar index hovers near 98, around six-week lows amid improving risk sentiment.
  • Narrow trading range reflects market caution ahead of potential US–Iran talks.
  • Donald Trump signals conflict may be nearing resolution, supporting risk assets.
  • Expectations build for ceasefire extension and renewed negotiations in Pakistan.
  • Easing oil prices reduces inflation concerns, weighing on dollar strength.
  • Risk premium built since February largely unwinds as diplomatic progress gains traction.

• Oil steadies as supply risks balance de-escalation signals
  • Brent crude rises 0.1% to $94.93 per barrel, while WTI remains flat at $91.29.
  • Prices hold steady as supply disruption concerns offset easing geopolitical rhetoric.
  • Donald Trump signals conflict could be nearing an end, supporting sentiment.
  • Iran indicates willingness to allow limited safe passage through Strait of Hormuz if deal is reached.
  • Ongoing negotiations keep markets balanced between risk premium and de-escalation hopes.
  • Energy markets remain sensitive to clarity on shipping flows and ceasefire durability.
    

Day’s Ledger*

Economic Data

• Euro CPI 
• US Weekly Jobless Claim Data 

Corporate Actions

• Jan-Mar Earnings: Alok Industries, Angel One, CRISIL, HDFC Life, HDFC AMC, VST Industries, Waaree Renewables, Wipro
• Anzen India board to consider fund raising 
• Moschip Technologies board to consider fund raising 

Policy

• ECB Lagarde Speech
• ECB Schnabel Speech
• ECB Lane Speech
• Fed Williams Speech
• Fed Miran Speech

Tickers to Watch

• ICICI Lombard Q4 profit rises 7.3% to ₹5.47 billion on premium growth
• HDB Financial Q4 profit rises 41.4% to ₹7.51 billion on steady growth
• Infosys signs Carlos Alcaraz as global ambassador, leverages AI for tennis
• HAL, GE sign tech deal to jointly make jet engines, boost defence ties
• Tata Motors Rolls Out Millionth Commercial Vehicle From Lucknow Plant
• Shriram Finance Arm Get In-Principle Approval From RBI To Start Primary Dealer Business

Must Read

• Govt notifies SEZ for Tata Semiconductor Manufacturing at Dholera
• Centre likely to remove mandatory registration for non-money egames
• China becomes India's top trade partner in FY26; deficit widens to $112 bn
• EU plans antitrust action, may force Meta to restore rival AI on WhatsApp
• FY26 exports grew despite tariffs, but impact of West Asia war looms
• Japan to provide $10 bn support to Southeast Asia to secure oil amid surge
• Oil Windfall: How Saudi, Russian And US Suppliers Drew Up To $30 Million/Hour Amid Iran Conflict

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

𝐆𝐫𝐞𝐞𝐧 𝐅𝐢𝐧𝐚𝐧𝐜𝐞 𝐈𝐬 𝐒𝐨𝐥𝐯𝐢𝐧𝐠 𝐭𝐡𝐞 𝐖𝐫𝐨𝐧𝐠 𝐏𝐫𝐨𝐛𝐥𝐞𝐦

Green finance is not failing for lack of innovation. It is failing because the system it operates in is misaligned. We have built more instruments than ever before, yet the financing gap persists.

𝐅𝐨𝐫𝐦𝐞𝐫 𝐅𝐢𝐧𝐚𝐧𝐜𝐞 𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐲 Arvind Mayaram writes, the problem is not just mobilising capital but enabling it to move. Infrastructure risk declines over time, but capital remains locked in. Public funds stay invested longer than needed, banks hold stabilised assets, and long-term investors struggle to find de-risked opportunities. The result is a system that prices yesterday’s risks and slows tomorrow’s investments.

(*Compiled from various media sources)