Asia markets advance on peace deal hopes, corporate earnings

By Gregor Stuart Hunter

SINGAPORE, April 16 (Reuters) - Stocks pushed higher in Asian trading on Thursday as optimism grew about a deal to end the Iran war with the U.S. ratcheting up pressure on Tehran, while traders digested a buffet of economic data and critical earnings reports.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9%, putting the benchmark on track for a third consecutive day of gains, while Japan’s Nikkei rose 2.2% to a fresh record. S&P 500 e-mini futures were 0.2% higher.

"We remain constructive overall" on emerging market stocks as "underlying profit growth is likely to be strong," analysts from Goldman Sachs wrote in a research report.

Earnings in the region will be "driven by AI-related demand, which should be relatively insulated from the direct impacts of the oil shock."

On Wednesday, the S&P 500 rose 0.8% and the Nasdaq Composite gained 1.6%, as strong quarterly earnings from Bank of America and Morgan Stanley lifted the indexes to record highs. With around 6% of companies reporting earnings for the quarter, 84% have beaten analysts’ expectations.

    "As we move into the heart of earnings season, the focus is shifting back toward fundamentals, with a more idiosyncratic, stock-driven environment beginning to take hold," said Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities in New York. "This reset provides a more constructive entry point in equities, particularly across large-cap quality growth."

Taiwan Semiconductor Manufacturing Co (TSMC) (N:TSM), a linchpin of the AI sector, is set to post quarterly earnings later on Thursday, with a 50% surge in net profit expected as demand for its advanced chips soars.

In oil markets, Brent crude rose 0.3% to $95.23 a barrel after a source briefed by Tehran told Reuters that Iran could consider allowing ships to sail freely through the Omani side of the Strait of Hormuz without risk of attack as part of proposals it has offered in negotiations with the United States. Elsewhere, a refinery fire in Australia also raised supply concerns.

The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, was flat at 98.02 as geopolitical worries eased and traders brought forward expectations of monetary policy easing from the Federal Reserve.

On Wednesday, U.S. President Donald Trump threatened to fire Fed Chair Jerome Powell from his separate seat on the U.S. central bank’s Board of Governors if Powell does not vacate that post as well when his term as Fed chief ends on May 15, intensifying a complicated standoff that has upended the Fed’s usually smooth transition of power and renewing concerns about its independence.

The euro edged up to within sight of its highest level since the war began at $1.1809, extending its recent winning streak into a ninth consecutive day.

Chinese shares advanced 0.7% after data showed that Asia’s largest economy grew 5.0% in the first quarter compared with a year earlier, beating analysts’ expectations as policymakers braced for the fallout from the Iran war.

"The solid start to the year on the back of strong export performance suggests the direct impact of the Middle East conflict remains contained for now," said Junyu Tan, regional economist for North Asia at Coface in Hong Kong.

"But the outlook is not all rosy despite China’s relative resilience amid energy supply chain disruptions," he added. "The export engine could still be constrained by weaker global demand if the conflict persists."

Australian shares were down 0.2% and the Aussie dollar was little changed after data showed on Thursday that Australian employment rose broadly in line with expectations in March as firms hired more full-time workers, while the jobless rate held steady at 4.3%.

"The latest data will reinforce the RBA’s assessment that upside risks to inflation are greater than downside risks to the labour market," analysts from Capital Economics wrote in a research report, referring to the Reserve Bank of Australia.

Gold clawed back 0.6% to $4,819.55, while in cryptocurrencies, bitcoin was down 0.2% at $74,718.47 as ether slipped 0.4% to $2,355.27.