Asian Stocks Surge as Oil Prices Plunge Following Trump’s Middle East Remarks

Asian markets opened sharply higher on Tuesday as oil prices fell, easing tensions after a volatile session overnight triggered by US President Donald Trump’s comments on the Middle East conflict. Trump suggested the war could be “over soon,” injecting optimism into global markets despite continuing uncertainty in the region.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.6 per cent, recovering losses sustained since the onset of the conflict. Brent crude futures dropped as much as 10 per cent to below $90 per barrel, while US equity futures remained subdued, with S&P 500 e-mini futures down 0.2 per cent, retracing part of Monday’s rebound.

The market swing came amid contrasting signals from Iran, where hardliners publicly supported new Supreme Leader Mojtaba Khamenei, reinforcing a defiant stance in the ongoing conflict. Oil prices initially spiked, and Wall Street shares fell sharply on Monday before Trump’s remarks and reports suggesting a potential softening of US sanctions on Russian energy helped markets recover.

“While all of this has helped ease some of the short-term panic, it’s hard to reconcile the idea of the conflict being ‘very complete,’” said Tony Sycamore, market analyst at IG in Sydney. “Nonetheless, the toning down of President Trump’s rhetoric is a welcome development that should help settle nerves for today’s session in Asia.”

Japan’s Nikkei 225 gained 3.6 per cent, while South Korea’s Kospi surged 6.4 per cent. The rapid rise in futures trading triggered a sidecar mechanism on the Korea Exchange, halting programme trading for five minutes after futures climbed more than 5 per cent.

Despite the market rebound, tensions remained high. Trump reiterated on Truth Social that any attempt by Iran to block oil flow through the Strait of Hormuz would be met with a forceful US response, warning that Iran would be hit “twenty times harder” than before.

US Treasury bonds recovered after Monday’s oil-driven spike had prompted concerns over inflation and raised expectations of tighter European central bank policy. The 10-year US Treasury yield fell 2.3 basis points to 4.109 per cent, with investors pushing back expectations for the Federal Reserve’s next rate cut to July, according to CME Group’s FedWatch tool. Analysts from ING noted that while nominal yields may fall temporarily, structural pressures from inflation remain.

Currency and commodities markets showed muted reactions. The US dollar index fell slightly to 98.79, erasing gains from the past week. Gold dipped 0.1 per cent to $5,133.55, remaining within its recent trading range. Cryptocurrencies also held steady, with Bitcoin rising 0.2 per cent to $69,127.60 and Ether down 0.4 per cent to $2,018.69.

Investors continue to monitor developments in the Middle East closely, balancing optimism from Trump’s remarks against ongoing geopolitical risks that could impact energy markets and global financial stability.