SINGAPORE: Asian stocks made a cautious start to trading on Tuesday (Jun 2) as uncertainty over whether the ceasefire in the Middle East conflict capped the lift to sentiment from renewed optimism around AI.
MSCI’s broadest index of Asia-Pacific shares outside Japan fluctuated between gains and losses as trading commenced, last 0.5 per cent lower, led by a 2 per cent decline for Korean shares after an initially higher open. S&P 500 e-mini futures were down 0.3 per cent, while in Japan, the Nikkei 225 slumped 0.7 per cent.
“Conflicting news coming out of the Middle East left markets whipsawing, with Iran stating that negotiations with the US have been suspended, only for President Trump to follow up in recent hours with reassurances that talks are continuing ‘at a rapid pace’,” analysts from Westpac wrote in a research note.
Brent crude held steady around US$95 a barrel after Lebanon announced a partial ceasefire between Hezbollah and Israel on Monday, which could clear the path for renewed efforts to end the three-month war between the United States and Iran.
Oil prices settled up more than 4 per cent on Monday after reports that Tehran had halted indirect negotiations with the US.
Overnight, the S&P 500 closed 0.3 per cent higher after ISM’s manufacturing PMI rose to 54.0 in May from 52.7 the previous month, beating expectations to reach the highest level in four years, likely driven by businesses front-loading orders amid rising prices and shortages because of the war with Iran.
“That the equity market is in boom mode is not up for debate,” despite higher energy prices and surging real interest rates, said David Rosenberg, founder and president at Rosenberg Research in Toronto, in a note to clients. “The S&P 500 is now up nine weeks in a row, a streak we last witnessed in late 2023.”
AI suppliers in Asia made gains after AI developer Anthropic said it had confidentially filed for a US initial public offering, which could draw a trillion-dollar valuation.
Alphabet shares slipped 0.7 per cent after the tech giant said it is looking to raise US$80 billion in equity offerings, including an investment from Berkshire Hathaway, in an aggressive push to fund expansion of its AI infrastructure.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, held steady at 99.18, firmly within the tight range it has sat in for the past three weeks.
The yield on the US 10-year Treasury bond was down 2.0 basis points at 4.455 per cent. Gold was down 0.1 per cent at US$4,479.17.
In cryptocurrencies, bitcoin was down 0.2 per cent at US$71,232.83, while ether was flat at US$2,002.03.
