Asian stock markets rose on Tuesday while oil prices declined, as investors reacted positively to renewed hopes of a potential diplomatic breakthrough between the United States and Iran.Regional equities advanced after signals from Donald Trump that Washington remains open to resuming talks with Tehran, despite the ongoing naval blockade in the Strait of Hormuz. The improved sentiment helped lift MSCI’s Asia-Pacific index by around 1%–1.6%, with strong gains seen in Japan and South Korea. Technology stocks led the rally, reflecting renewed investor appetite for risk assets.

South Korea’s Kospi index stood out, climbing to a multi-week high, while broader regional markets tracked gains on Wall Street, where the S&P 500 has recovered losses triggered earlier by the Iran conflict. Investors appear to be betting that easing geopolitical tensions could stabilise global growth and reduce inflationary pressures.

Oil prices, which had surged in previous sessions amid fears of supply disruptions, moved lower as diplomatic optimism eased concerns. Brent crude fell roughly 2.6%–2.7% to around $96–$97 per barrel, while US crude also declined, reflecting expectations that a potential deal could prevent further supply shocks.The decline in oil prices also supported bond markets, with US Treasury yields easing slightly as lower energy costs are seen as helping contain inflation. At the same time, the US dollar weakened, while safe-haven assets like gold rebounded modestly after recent declines.

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Despite the positive market reaction, analysts caution that uncertainty remains high. The Strait of Hormuz — a critical artery for global oil flows — continues to be affected by geopolitical tensions, and any breakdown in talks could quickly reverse gains across markets.The latest moves highlight how closely global financial markets are tracking developments in the Middle East, with investor sentiment swinging between risk aversion and optimism depending on signals of escalation or diplomacy.

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