Asian markets are likely to open with modest gains following a rebound in US equities, fueled by tentative hopes that the war in the Middle East may be nearing a resolution. Trading activity, however, is expected to be muted with several regional markets closed for holidays. The S&P 500 Index closed up 0.1% after earlier tumbling as much as 1.5%, while the Nasdaq 100 also ended 0.1% higher.
The positive sentiment follows statements from US President Donald Trump indicating a potential resolution to the conflict in the coming weeks. Trump's administration assessed that a mission to reopen the Strait of Hormuz would push the war beyond his timeline. This relatively clear timeline significantly alleviated investor concerns about prolonged Middle East conflicts disrupting global markets. Iran is reportedly drafting a protocol with Oman to monitor traffic through the Strait of Hormuz, requiring shippers to pay tolls.
However, some analysts remain cautious, noting that the sustainability of the equity market recovery hinges on oil prices and the resolution of the Strait of Hormuz situation. "Equity markets seem to be looking past the risk of a higher embedded premium in oil and more focused on the Strait reopening," said Adam Turnquist, chief technical strategist for LPL Financial. "With oil clearly in the driver's seat of risk appetite, sustainability of the recovery in equity markets appears vulnerable."
Several key Asian markets including Australia, New Zealand, Hong Kong, Singapore, the Philippines, and Indonesia are closed for holidays. US markets will also be closed for Good Friday, though the government is still scheduled to publish economic data, including the March nonfarm payrolls report. Investors will be closely monitoring these economic releases for further insights into the health of the US economy.
