Asian stocks soar following Trump’s Iran cease – fire and the ‘immediate’ opening of the Strait of Hormuz—even though it’s still unclear how open the strait actually is

(SeaPRwire) –   Asian markets experienced a significant upswing on Wednesday morning as investor sentiment was buoyed by a two-week ceasefire agreement between the U.S. and Iran, despite ongoing uncertainty regarding the specifics of the truce for transit through the critical Strait of Hormuz.

At 2:30 a.m. Eastern Time, South Korea’s KOSPI had increased by 7.1%, and Japan’s Nikkei 225 had climbed 5.5%. Taiwan’s TAIEX saw a 4.6% gain. Hong Kong’s Hang Seng Index, returning from an extended holiday weekend, advanced by 3.1%, while Australia’s ASX 200 was up 2.6%.

Key stock indices in Vietnam, Indonesia, and the Philippines all posted gains exceeding 2.0%. (This positive mood may have been further supported by indications from index provider FTSE that it plans to elevate Vietnam to emerging market status and will not reclassify Indonesia as a frontier market). The Straits Times Index in Singapore and Malaysia’s KLCI both recorded more modest increases of under 1.0%.

Airline stocks, which have suffered due to fuel shortages, rallied strongly on Wednesday. Australia’s national carrier, Qantas, saw its shares rise by 10%, and low-cost airline AirAsia surged 6.9%. Cathay Pacific in Hong Kong increased by 4.7%.

On Tuesday evening, U.S. President Donald Trump declared the commencement of a two-week ceasefire with Iran, facilitated by Pakistan. The announcement arrived just 90 minutes before Trump’s own deadline of 8 p.m. Eastern Time, a point after which he had vowed to commence airstrikes on Iranian civilian infrastructure, including power plants and bridges.

Following the ceasefire announcement, oil prices dropped below $100 per barrel, providing relief to major Asian oil-importing countries like China, South Korea, Singapore, and the Philippines. Both West Texas Intermediate and Brent crude oil benchmarks declined by more than 13%.

Is the Strait of Hormuz open?

A reopening of the Strait of Hormuz, even if only partial, would be a welcome development for world governments confronting the most severe energy crisis since the 1970s. The strait, a vital shipping lane for Middle Eastern trade, has been closed since the onset of the Iran conflict.

A substantial portion of the oil and gas that transits the strait is destined for Asia but is currently obstructed due to the hostilities.

The closure has resulted in at least 800 vessels being stranded in the Gulf. In addition to oil and gas, the strait is a crucial passage for commodities such as fertilizer and helium.

However, the U.S. and Iran are sending conflicting messages about the ceasefire’s terms. Trump stated the truce is dependent on the “complete, immediate, and safe opening of the Strait of Hormuz.” Conversely, Iran’s foreign minister, Abbas Araghchi, indicated that passage is “possible via coordination with Iran’s armed forces.”

An anonymous regional official subsequently informed the Associated Press that the ceasefire agreement permits both Iran and Oman, the nations bordering the Strait, to collect transit fees. Iranian officials had earlier proposed a fee of $2 million per ship during discussions with the U.S.

Reports indicate that the limited number of ships that have traversed the Strait in recent weeks did so only after negotiating with Tehran and paying fees in Chinese yuan.

How Asian governments are grappling with the crisis

Governments in Asia have adopted a prudent approach in response to inconsistent communications from the White House, which have included leaks about negotiations alongside aggressive social media statements from Trump (one of which, on Tuesday, cautioned that “a whole civilization will die tonight”).

On April 7, Singapore unveiled relief measures worth nearly 1 billion Singapore dollars ($784 million) for its households and businesses. The nation also declared its aim to bolster its fuel reserves, with Home Affairs Minister K. Shanmugam describing the initiative as “costly” but “necessary.”

Malaysia also alerted its citizens to prepare for the effects of increasing fuel and transport costs, noting that global energy supplies will require time to recover due to significant infrastructural damage in the Middle East.

“Higher global fuel prices will lead to increased costs for petrol, diesel, and air travel, compounded by rising logistics and insurance expenses,” Malaysian deputy prime minister Fadillah Yusof stated on Monday, as reported by the Sarawak news outlet Dayak Daily. “We need to plan ahead so that we can manage whatever challenges that arise.”

Nations throughout the region have implemented fuel rationing, reactivated coal-fired power plants, and prohibited exports of refined fuel products to combat shortages. Even in the event of Hormuz reopening, energy exporters will need considerable time to repair infrastructure damaged during the conflict.