Ceasefire Uncertainty Dampens Mood in Asia | The Asia Trade 4/9/2026
Speakers
Summary
- A tentative two-week cease-fire between the U.S. and Iran is already facing violations, with continued Israeli attacks in Lebanon and Iranian strikes in Kuwait, Saudi Arabia, and the UAE, creating market uncertainty.
- The Strait of Hormuz remains largely blocked, with only a minimal increase in ship traffic; Iran may impose tolls or conditions, delaying a return to normal shipping and sustaining energy market volatility.
- Oil prices plummeted in the biggest one-day drop since April 2020 but rebounded; prices are sensitive to cease-fire fragility and unclear reopening terms for the Strait of Hormuz.
- Fed minutes from the March meeting reveal policymakers see two-sided risks from the Iran war: prolonged conflict could spur inflation (requiring higher rates) or slow the economy (warranting rate cuts).
- Software stocks underperformed in the U.S. session due to AI competition pressures, with Meta unveiling a new closed AI model, while private credit exposure to software companies raises systemic concerns.
- George Schultze argues oil and gas producers are in a more favorable environment due to supply shocks and sustained demand from AI data center build-outs, but he warns of case-by-case risks depending on hedging.
- Schultze highlights significant risks in the private credit market, especially from software company exposures (20-30% of private credit), which could trigger defaults and spill over to insurers with low capital ratios.
- RBNZ Governor Anna Breman emphasizes upside inflation risks from the conflict, particularly via fuel costs passing into food prices, and signals readiness to hike rates if medium-term inflation pressures rise.
- Jennifer Parker notes that shipping through the Strait of Hormuz will not quickly normalize due to safety deterrence and Iranian conditions, requiring naval reassurance and clarity, implying prolonged disruption.
- Asian currencies and equities saw a relief rally on cease-fire news but are consolidating as uncertainty persists; central banks like the RBNZ remain vigilant, with some intervening to defend currencies.
- Tech stocks in Asia, particularly semiconductors, are focused on AI capex trades, but software faces disruption from new AI models, while earnings watches include Fast Retailing and Seven & I amid supply chain issues.
Trade Ideas
Schultze said, "We think at Schultze Asset Management, the oil and gas producers, it is a more favorable environment going forward." Supply shocks from the Iran war have created backlogs, and demand is sustained from AI data center build-outs and global energy needs. LONG because the environment supports higher commodity prices and profitability for producers, despite cease-fire uncertainty. The cease-fire holds firmly, Strait of Hormuz reopens quickly, and supply normalizes faster than expected.
Schultze said software companies represent a significant portion (about 20%) of the private credit market and "might be disrupted altogether," increasing default risks. Disruption from AI competition and economic uncertainty could lead to defaults in software companies, causing markdowns in private credit and potentially systemic issues for insurers. AVOID due to high risk of disruption and spillover effects, especially given untested private credit cycles and retail investor exposure. Software companies adapt successfully to AI changes, avoiding widespread defaults, and private credit markets prove resilient.
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This Bloomberg Markets video, published April 09, 2026, features George Schultze discussing XLE, XLK. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: George Schultze · Tickers: XLE, XLK