Asian stock markets rebounded Tuesday, and crude oil prices fell sharply, after U.S. President Donald Trump indicated the conflict with Iran may be nearing resolution. The MSCI Asia Pacific Index rose 2.2%, reversing substantial losses from the previous day, as investors reacted to Trump’s comments suggesting a swift end to hostilities.
Trump stated that military objectives were “pretty well complete” and predicted the war would resolve “very soon,” though he cautioned it wouldn’t necessarily conclude within the current week. The remarks followed a period of heightened tension after the U.S. Military struck Iran ten days prior, triggering concerns about wider regional instability and disruptions to global energy supplies.
Brent crude oil experienced a significant drop, falling 10% to $89.06 a barrel, a retreat from a peak of $119.50 reached on Monday. The initial surge in oil prices had been fueled by constricted supply due to shipping disruptions, particularly in the vital Strait of Hormuz. The potential for a de-escalation of the conflict eased those immediate concerns.
Wall Street also reversed earlier losses, with the Dow Jones Industrial Average ending the day up half a percent, the S&P 500 gaining more than eight tenths of a percent, and the Nasdaq Composite rising almost 1.4%. The late-session rally was spurred by Trump’s optimistic outlook and reports of a possible easing of sanctions on Russian energy, according to market analysts.
The volatility underscores the sensitivity of markets to developments in the Middle East. Kevin Mahn, president and chief investment officer of Hennion & Walsh Asset Management, noted that the situation remains fluid. “Oil is moving markets, and until we see a tanker or at least multiple tankers…pass successfully through the Strait of Hormuz unharmed, I consider this volatility is going to stick in the markets,” he said.
South Korea’s Kospi index, which had experienced significant selling pressure earlier in the week, showed signs of stabilization. However, analysts cautioned against interpreting the rebound as a definitive shift back to risk-on sentiment. Dilin Wu, a research strategist at Pepperstone Group, described the rally as “more of a relief rally after an extreme risk-off episode.”
The Strait of Hormuz remains effectively closed, leading to output curtailments by major producers in the Persian Gulf, including Saudi Arabia. The Group of Seven finance ministers affirmed their readiness to take steps to support energy supply, including potential releases from strategic reserves, though no immediate action has been taken.
Corporate news offered a mixed picture. Hewlett Packard Enterprise Co. Exceeded analysts’ expectations with its revenue outlook, driven by demand for hardware supporting artificial intelligence workloads. Meanwhile, Apple Inc. Reportedly delayed the launch of a smart home display due to challenges with its AI capabilities. Anthropic PBC is also engaged in a legal dispute with the Defense Department over concerns about its technology and the U.S. Supply chain. Novo Nordisk A/S and Hims & Hers Health Inc. Announced a collaboration to market obesity drugs, ending a period of legal conflict between the two companies.
As of 9:53 a.m. Tokyo time, futures contracts for the S&P 500 and Nasdaq 100 were down slightly, indicating potential headwinds for the continued rally. Eric Van Nostrand, chief investment officer at Lazard Asset Management, expressed skepticism about the durability of the positive sentiment, noting Trump’s past statements have not always been reliable indicators. “There’s a lot of misplaced confidence in markets right now that things will ease quickly,” he said, adding that the closure of the Strait of Hormuz will have a “very meaningful and global” economic impact.
