Main developments
Donald Trump said the US had held “very good and productive” conversations with Iran over ending the war. As a result he said possible strikes on Iranian energy sites and power plants had been postponed.
Iran denied holding talks with the US but confirmed that mediation efforts were under way by other nations, including Pakistan and Turkey. Iran and Pakistan’s leaders held a call on Monday.
Israeli Prime Minister Benjamin Netanyahu said Trump was seeking a deal with Iran that “protects [Israel’s] vital interests”.
Asian stocks rebounded on Tuesday following Trump’s comments. The S&P 500 closed 1.1 per cent higher on Monday.
Brent crude gained 3.4 per cent on Tuesday to $103.33 after closing below $100 a barrel for the first time since March 11.
China stocks rise amid broader Asia markets recovery
Chinese stocks joined a broader recovery in Asian equity markets on Tuesday following remarks from US President Donald Trump suggesting a diplomatic resolution to the war.
Mainland China’s benchmark CSI 300 gained 0.9 per cent while Hong Kong’s Hang Seng index rose by 1.6 per cent.
The recovery came even as Brent crude prices gained 3.4 per cent to $103.33 a barrel and the dollar rose 0.4 per cent against a basket of key trading partners.
Gold fell 1.8 per cent to $4,326 a troy ounce.
Yields on Chinese 10-year government bonds were stable at 1.83 per cent and the currency weakened 0.2 per cent against the dollar to Rmb6.89.
Japanese business activity slows as war hits input costs
Japanese business activity slowed in March, dropping from the near four-year high recorded in February, as war in the Middle East caused input costs to surge and hit confidence in the manufacturing sector.
The S&P Global flash Japan Manufacturing Purchasing Managers’ index slid to 51.4 in March, retreating from the 53.0 reading in February.
The survey highlighted the impact of the “sharp and accelerated rise” in average input costs confronted by Japanese companies, and an overall drop in optimism arising from the war and Japan’s vulnerability to supply shocks.
Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: “With so much uncertainty around the length and impact of the Middle East War, firms were less confident around future output,” adding that optimism among Japanese services companies had fallen even more notably than at manufacturers.