Ceasefire Optimism Drives Rally in Asia, but Tensions Simmer Beneath

GLOBAL MOOD: Risk-on
Drivers: US-Iran Ceasefire, Hormuz Tensions, Policy Uncertainty 

Asian equities reflected a risk-on mood on Thursday, buoyed by Wall Street gains and an extension of the US–Iran ceasefire that eased immediate escalation fears. Optimism was supported after US President Donald Trump prolonged the truce, signalling a preference for diplomacy even as the US maintained its naval blockade.

Regional markets rallied strongly, with the Nikkei 225 and Kospi hitting record intraday highs, driven by robust tech-led gains and stronger-than-expected economic data. Corporate earnings momentum further reinforced positive sentiment.

However, underlying risks persist. Iran’s refusal to participate in talks and fresh maritime tensions in the Strait of Hormuz highlighted the fragility of the ceasefire. The continuation of the blockade and absence of a clear negotiation timeline suggest that geopolitical risks remain unresolved.

Overall, markets are leaning risk-on in the near term, supported by liquidity and earnings, but remain sensitive to sudden shifts in the geopolitical landscape, keeping volatility risks elevated. 

TODAY’S WATCHLIST
 - India April Flash PMI
 - US Jobless claim Data
 - Jan-Mar Earnings: Adani Energy, Infosys 

THE BIG STORY
Iran has intensified pressure in the Strait of Hormuz by seizing two ships, signalling that tensions remain high despite the extension of the ceasefire. The move comes after US President Donald Trump paused planned attacks but maintained the naval blockade on Iranian trade. Tehran has made it clear that a full ceasefire is unlikely without removal of the blockade, with senior Iranian officials arguing that reopening Hormuz is impossible under continued military and economic pressure.

The maritime standoff is becoming increasingly serious, with reports that US forces have intercepted and redirected multiple Iranian-linked tankers near Asian waters. Iran, meanwhile, continues actions aimed at restricting passage through the strategic waterway, which remains central to global energy flows. Nearly two months into the conflict, diplomacy appears stalled, with little visible progress towards restarting formal negotiations.

Beyond West Asia, geopolitical tensions are also broadening globally, highlighted by renewed Russian attacks in Ukraine. The overlap of multiple geopolitical flashpoints is reinforcing market concerns around energy security, shipping disruption and global risk sentiment, even as an uneasy ceasefire technically remains in place.

Data Spotlight
US crude inventories unexpectedly rose by 1.9 million barrels in the latest week, contrary to expectations for a draw, while stocks at the Cushing hub increased by 806,000 barrels. However, fuel markets remained tight, with gasoline inventories falling sharply by 4.6 million barrels and distillates declining to 3.4 million barrels, both significantly exceeding expectations. The data points to resilient fuel demand despite softer refinery activity and ongoing geopolitical disruptions.

In Europe, consumer confidence deteriorated sharply, with Euro Area sentiment falling to -20.6, the weakest since December 2022, reflecting growing concerns over inflation, energy costs and economic uncertainty. Fiscal conditions improved marginally, with the Eurozone deficit-to-GDP ratio easing to 2.9% in 2025, though several major economies including France and Belgium remained above EU deficit limits.

Takeaway:
Tight fuel inventories continue to support energy market concerns, while weakening European consumer sentiment highlights the broader economic strain from persistent geopolitical and inflation pressures.

WHAT HAPPENED OVERNIGHT

• US stocks hit fresh records as ceasefire extension boosts sentiment
  • Dow Jones gained 0.69%, S&P 500 rose 1.05%, and Nasdaq surged 1.64% to fresh record closes.
  • Markets rallied after Donald Trump indefinitely extended the Iran ceasefire.
  • Strong corporate earnings added support despite ongoing US naval blockade and tensions in Strait of Hormuz.
  • GE Vernova jumped 13.8% after raising revenue outlook, while Boston Scientific gained 9.0% on earnings.
  • Boeing advanced 5.5% after reporting smaller-than-expected quarterly loss.
  • Tesla rose 4.6% after hours following surprising positive free cash flow.

• US Treasury yield steady as markets await clarity on geopolitics and fed outlook
  • The US benchmark 10-year yield holds around 4.30% amid cautious market positioning.
  • Ceasefire extension provides temporary relief, but Strait of Hormuz tensions persist.
  • Trump confirms no immediate attacks while maintaining blockade on Iran.
  • Reports of Iranian action against ships keep geopolitical risks elevated.
  • Fed nominee Kevin Warsh viewed as more hawkish after stressing policy independence and reforms.
  • Markets continue to expect no rate change at upcoming Fed meeting.

• US Dollar trades sideways as ceasefire relief offsets lingering uncertainty
  • The US dollar index holds around 98.3, remaining near pre-war levels.
  • Markets balance ceasefire extension against continued tensions in Strait of Hormuz.
  • Donald Trump extends Iran ceasefire indefinitely while maintaining naval blockade.
  • Reports of Iranian action against ships in Hormuz keep geopolitical uncertainty elevated.
  • Fed nominee Kevin Warsh signals independent and relatively hawkish policy stance.
  • Markets expect no change in Fed rates at upcoming policy meeting.

• Oil jumps above $100 as supply disruptions and Hormuz attacks fuel fears
  • Brent crude rises 3.48% to $101.91 per barrel, while WTI gains 3.67% to $92.96.
  • Oil extends gains after both benchmarks climbed around 3% in previous session.
  • Prices supported by sharp draw in US gasoline and distillate inventories.
  • Reports of gunfire attacks on container ships in Strait of Hormuz intensify supply concerns.
  • Lack of progress in US–Iran peace talks add to geopolitical risk premium.
  • Markets increasingly price in prolonged disruption risks across key shipping routes.
    
    

Day’s Ledger*

Economic Data

• Eurozone Flash PMI 
• India April Flash PMI 
• US Job Data
• US April Flash PMI 

Corporate Actions

• Jan-Mar Earnings: Adani Energy, Aditya Birla Sun, Choice International, Cyient, Himadri Speciality, IEX, Infosys, LTimindtree, Tata Capital, Tata Teleservices Maharashtra, UTI AMC, Union Bank
• Balrampur Chini board to consider fund raising
• Mini Diamonds board to consider bonus share issue
• PAE board to consider bonus share issue
• Rolex Rings board to consider buy back of shares

Policy

• Euro Non-Monetary Policy Meeting

Tickers to Watch

• Tech Mahindra net profit rises 16% to ₹13.54 billion, revenue up 13%
• Havells India profit rises 40% to ₹7.23 billionon strong demand
• LTTS profit rises 6.75% to ₹3.32 billion, revenue up 8.3% Y-o-Y
• Tech budgets will not rise big time: Persistent CEO Sandeep Kalra
• Eveready bets on alkaline batteries with India's first plant in Jammu
• Godrej Industries Group to invest ₹50-70 billion in unlisted arms
• Mother Dairy eyes ₹240 billion topline in FY27 amid expansion push
• JSW Steel to sign JV with JFE Steel for Odisha plant expansion on April 24

Must Read

• FDI firms' net sales growth slows to 8.7% in FY25 from 9.4%: RBI data
• RBI committed to single global dollar-rupee market: RBI DG Sankar
• Disaster risks morph into fiscal, development crises: DEA secretary
• India to buy urea at near double pre-war prices amid supply disruption
• MPC members voted for status quo on rates amid West Asia crisis: RBI minutes
• Govt revises ATF norms, allows blended inputs for cleaner fuel options
• AI can transform financial market infrastructure: SBI Chairman Setty
• IRGC seizes two vessels in Strait of Hormuz, cites 'red line' breach
  
  

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

𝐏𝐚𝐥𝐦 𝐎𝐢𝐥 𝐏𝐚𝐧𝐢𝐜 𝐈𝐬 𝐌𝐢𝐬𝐩𝐥𝐚𝐜𝐞𝐝 𝐚𝐬 𝐒𝐮𝐩𝐩𝐥𝐲 𝐁𝐮𝐟𝐟𝐞𝐫𝐬 𝐓𝐞𝐦𝐩𝐞𝐫 𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚’𝐬 𝐍𝐨𝐢𝐬𝐞

Indonesia’s B50 announcement has moved sentiment in palm oil markets, but it has not altered the underlying supply picture. Output remains strong, global vegetable oil production is rising, and palm oil is entering its peak season.

𝐆 𝐂𝐡𝐚𝐧𝐝𝐫𝐚𝐬𝐡𝐞𝐤𝐡𝐚𝐫 writes, the biodiesel push itself is still constrained by execution challenges, fiscal costs, and engine compatibility. Prices have risen, but largely in response to crude oil volatility and geopolitical disruption rather than any structural tightening in supply.

For India, the risk is not availability but price transmission

(*Compiled from various media sources)