Asian Markets Rally as Ceasefire Eases Oil Shock Fears

Asian stock markets rose on Tuesday as geopolitical tensions between Iran and Israel appeared to de-escalate, reducing investor anxiety over a potential global energy shock. The gains followed U.S. President Donald Trump’s announcement of a staggered ceasefire agreement between the two countries.

Investor confidence improved after Iran refrained from disrupting oil shipments through the strategically vital Strait of Hormuz, despite a recent U.S. strike on Iranian nuclear facilities. Instead, Iran launched missiles at a U.S. military base in Qatar. The situation was later declared stable, and no oil infrastructure was reported damaged, helping to calm market fears.

As tensions eased, global oil prices fell significantly. Brent crude declined 2.2% to $69.24 per barrel, and West Texas Intermediate dropped 2.3% to $66.19. Both benchmarks had already seen losses exceeding 7% overnight, driven by reduced expectations of supply disruptions and a fading geopolitical risk premium.

Oil Pressure Recedes, Markets Respond Favorably

Stock indices across the Asia-Pacific region responded positively to the reduced risk environment. Japan’s Nikkei 225 and Hong Kong’s Hang Seng Index each posted gains of 1.4%. In China, the Shanghai Composite rose 0.8%, while South Korea’s Kospi jumped 2.7%. Singapore, Sydney, and Taipei also advanced, by 0.7%, 1.1%, and 1.8% respectively. Jakarta was the regional outlier, falling 1.7%.

Although airstrikes reportedly continued in parts of Iran, early indications suggested that Tehran would pause further retaliation if Israeli attacks ceased. The provisional ceasefire is seen as a tentative but important step toward regional stability, with analysts viewing it as a short-term relief from extreme scenarios that could impact oil supply chains.

Meanwhile, in currency markets, the U.S. dollar weakened after comments from a Federal Reserve governor indicated openness to a rate cut at the July policy meeting. The market currently expects easing by September, amid easing economic risks and more stable inflation.

The overall sentiment in global markets reflected cautious optimism, as the potential for further escalation diminished and economic indicators signaled a more favorable outlook.