Asian stocks rose cautiously as Iran's potential return to talks with the US offered optimism for Middle East stability ahead of a ceasefire deadline. Oil prices dropped, while the dollar and Treasuries remained steady. Markets are navigating a shifting narrative, balancing hope for eased tensions with lingering concerns.
Asian stocks edged higher as signs Iran may join talks with the US fostered cautious optimism about progress in the Middle East ahead of a looming ceasefire deadline. Oil dropped.
Gauges in Japan, South Korea and Australia advanced at the open with the broader MSCI Asia Pacific Index rising 0.3%. S&P 500 contracts also edged higher in early trading after the index slipped 0.2% on Monday from a record, weighed down by declines in several technology heavyweights. Apple Inc. shares slipped in late US trading after the company named John Ternus as its next chief executive officer.
Global crude benchmark Brent fell 0.7% to $94.80 a barrel early Tuesday, after gaining 5.6% in the prior session. The dollar and Treasuries were steady.
President Donald Trump said he is unlikely to extend the truce with Iran if no agreement is reached before its expiry Wednesday evening, Washington time. Iran is also preparing to send a delegation to the next round of talks, according to people familiar with the plans who declined to be identified.
Attention is shifting to whether the US and Iran can resume negotiations in Pakistan to calm strains and reopen the Strait of Hormuz after an initial round in Islamabad ended without a deal. The dollar has weakened over the past three weeks and several equity gauges have recouped war-related losses as markets price in easing tensions, cheaper oil and stronger economic growth.
“Markets are once again grappling with a rapidly shifting narrative in the Middle East, as the past 48 hours have delivered both optimism and renewed concern,” said Daniela Hathorn, senior market analyst at Capital.com, adding that the market feels “stuck at a crossroads” as a result of the jostling.
Chip stocks in Asia will be in focus after the Philadelphia Semiconductor Index advanced, notching a 14th straight session in the green — a winning streak that it has exceeded just once, in 2014.
Transits through Hormuz have reduced to a trickle as Iran tightens control in retaliation for strikes. On Friday, that paralysis appeared to end, with Tehran saying it would reopen the waterway, before reversing course during the weekend as the US maintained a naval blockade and attacked an Iranian ship.
Beyond the strait, arguably the most fraught issue is Iran’s nuclear program. Trump has demanded Iran forswear any ambitions for a nuclear weapon and hand over stockpiles of enriched uranium. Tehran has balked at giving up its uranium and has said its nuclear program is for peaceful purposes.