Korea Leads Rebound in Asian Stocks, Dollar Gains: Markets Wrap

A rebound in global equities spread to Asia, with South Korea recovering from its biggest drop on record, as markets regained a sense of composure after the Middle East conflict spiked volatility.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — A rebound in global equities spread to Asia, with South Korea recovering from its biggest drop on record, as markets regained a sense of composure after the Middle East conflict spiked volatility.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The MSCI All Country World Index rose 0.4% as Asian shares gained for the first time since the Iran war broke out over the weekend. South Korea’s benchmark surged 11%, rebounding from a 12% plunge in the previous session. Sentiment was initially boosted by a rally on Wall Street after economic data soothed inflation concerns. The advance appeared tentative, with equity-index futures for the US and Europe edging lower. Also, the dollar strengthened, reasserting its role as a haven in times of crisis.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.While sentiment in equities market rebounded, crude oil continued its advance. Gold extended its gains amid concerns the conflict could be drawn out. Treasuries declined, with the 10-year yield rising three basis points to 4.13%.“I think that market participants are looking and trying to say, ‘How is this going to play out? What’s the end game?’” David Solomon, Goldman Sachs Group Inc. chief executive officer, said in an interview on Bloomberg TV. “As they have more information in the coming days, the coming week or two, I think that will have an impact on risk premiums.”The rebound reflected a reassessment of the war’s potential fallout, as investors weighed whether the conflict would materially slow global growth or ignite a sustained pickup in inflation through higher energy prices. For the recovery to be sustained, investors will likely need greater clarity on the duration of the conflict and the extent to which it will fan inflation.Uncertainty about how long the conflict may last is compelling investors to look to recent history as a guide for markets. Many are revisiting trades enacted after Russia’s 2022 invasion of Ukraine, betting that this week’s spike in energy prices will stoke inflation, sparking lasting strength in the dollar as well as weakness in bonds and stocks.“Whether or not the ‘feel good’ sentiment of today can last depends on what headlines we get out of the Middle East over coming days,” said Tim Waterer, chief market analyst at KCM Trade. “Market sentiment can shift on a dime depending on whether escalation or de-escalation seems the more likely path at any given point.”Traders remained focused on oil. Crude climbed as traders assessed the fallout from the US-Israeli war against Iran, with the combatants vowing to press on with the conflict that’s upending energy markets.West Texas Intermediate climbed above $77 a barrel, after spiking about 11% in the first three days of the week, while Brent traded above $84.Elsewhere, China’s government told the country’s largest oil refiners to suspend exports of diesel and gasoline as the escalating conflict disrupts the arrival of crude from one of the world’s largest producing regions. Chinese shares also gained even as the country set its 2026 gross domestic product target at 4.5% to 5%, the lowest growth objective since 1991.With virtually no oil or fuel making its way out of the Persian Gulf since US and Israeli attacks began at the weekend, refiners from Japan to Indonesia and India have begun cutting back run rates and suspending exports.Meanwhile, President Donald Trump expressed confidence in the military campaign against Iran even as the timeline for operations remained unclear. Tehran targeted Israel and Gulf states while Israeli and American forces followed through on pledges to bomb targets in the Islamic Republic. The US sank an Iranian warship in international waters.Tehran also dismissed a report it had reached out to the US to negotiate an end to the conflict as “pure falsehood.” China, meanwhile, will dispatch its special envoy on Middle East affairs to the region to conduct mediation efforts.One key focus for traders in Asia is Korea — a bellwether for artificial intelligence investments that has rallied to become the world’s second-best-performing equities market.“Korean stocks are likely to remain in a volatile situation depending on the oil price, making it difficult to time an entry,” said Hiroshi Namioka, chief strategist at T&D Asset Management. “When volatility is high, the investment appeal deteriorates on a risk-return basis.”Corporate Highlights:Some of the main moves in markets:StocksCurrenciesCryptocurrenciesBondsCommoditiesThis story was produced with the assistance of Bloomberg Automation.—With assistance from Bernadette Toh, Gabrielle Ng and Aya Wagatsuma.Postmedia is committed to maintaining a lively but civil forum for discussion. 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