MUFG notes that the dominant macro driver for Asian markets is the US–Iran conflict and its impact on Strait of Hormuz energy flows, which had pushed global long-bond yields to post-2008 highs and pressured oil-importing Asian currencies. Comments from President Trump about being in final negotiation stages with Iran triggered a sharp fall in WTI and Brent prices.

Crude drops as geopolitical risk eases

"The dominant macro theme entering Thursday's Asian session is the US-Iran conflict and its sustained disruption to Strait of Hormuz energy flows, which has driven global long-bond yields to their highest levels since the 2008 financial crisis and placed broad pressure on oil-importing Asian currencies."

"That backdrop shifted materially late in New York trade on Wednesday when President Trump told reporters the US is in the "final stages" of negotiations with Iran — adding that no sanctions relief would be granted until a deal is formally signed, and that failure to reach agreement would prompt swift military action."

"The comments sent WTI crude down as much as 7%, settling at $98.26/bbl, while Brent settled at $105.10/bbl."

"Iran was reportedly still reviewing the text of any proposed agreement and had not yet formally responded as of Wednesday evening, leaving the durability of the rally the central question for today's session."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)