Stocks rally, oil drops on Mideast war optimism

NEW YORK: Global stocks rallied and oil prices fell Wednesday (Apr 1) after US President Donald Trump said the Middle East war that has roiled markets could be over within weeks - despite Tehran pushing back against his comments on a ceasefire.

Wall Street's main indices closed higher, building on major gains from the previous day.

In Europe, Frankfurt and Paris both jumped more than two per cent, while London rose 1.9 per cent.

That came after Asian markets closed sharply higher, with Seoul soaring more than eight per cent, Tokyo up five per cent and Chinese stocks also rising.

Oil prices fell, with international benchmark Brent for June delivery down 2.7 per cent after falling as much as five percent earlier. The main US contract WTI dropped 1.2 per cent.

Trump said Tuesday that the United States could end operations in Iran within "two weeks, maybe three," and claimed that the Islamic republic was seeking a ceasefire, a statement denied by Tehran.

The White House said Trump would address the nation on Wednesday "to provide an important update on Iran."

The US president has frequently U-turned after making policy statements, particularly with regards to foreign relations and military operations, a trait that has roiled markets.

Tom Cahill, from Ventura Wealth Management, told AFP markets were due to pull back some ground after being "oversold."

"When news came out about a potential ceasefire in the war in the Middle East, that obviously was the catalyst to drive the market higher," he said.

The economic impact of the conflict is worsening, with average US gasoline prices topping US$4 a gallon this week for the first time in four years, European inflation spiking and governments unveiling a range of support measures.

Iranian President Masoud Pezeshkian said the country had the "necessary will" to end the war, provided its enemies guaranteed it would not flare up again.

But Israeli Prime Minister Benjamin Netanyahu insisted that Israel would press ahead with its military campaign and that "we will continue to crush" the Iranian government.

Traders remained wary as fresh strikes hit Tehran on Wednesday, and an oil tanker off the coast of Qatar was struck by an Iranian missile.

"Despite today's relief wave on markets, deep problems remain," said Susannah Streeter, chief investment strategist at Wealth Club. 

She said elevated crude prices, still about 50 per cent above pre-war levels, "signals that scepticism still remains about Trump's claims of progress, and worries persist about how extraction from the conflict is still set to be complex".

FOREX.com analyst Fawad Razaqzada said there was still a long way to go before oil prices could come back down to levels before the conflict.

"There's simply too much uncertainty, both in terms of supply disruption and geopolitical escalation, for prices to meaningfully reset lower just yet," he said.

In company news, shares in Chinese artificial intelligence startup Zhipu, which went public in January, soared more than 32 per cent after it said revenue from its cloud business almost tripled last year.