SINGAPORE, March 10 - Asian stock markets advanced sharply and oil prices fell steeply at the open on Tuesday, following a turbulent round of trading overnight after U.S. President Donald Trump said the Middle East conflict could be "over soon." The reaction in Asia pared some of the earlier losses tied to the outbreak of hostilities.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.6%, cutting into losses accumulated since the conflict began. Brent crude futures tumbled as much as 10%, slipping to below $90 per barrel as trading resumed.
U.S. equity futures were more subdued in comparison, with S&P 500 e-mini futures down 0.2% as they sought to give back part of Monday’s rebound.
Mr. Trump’s comments injected an element of optimism into markets, yet they came amid sharply contrasting developments in Iran. Hardline elements there rallied behind new Supreme Leader Mojtaba Khamenei in a pointed show of defiance, adding a stark counterpoint to the president’s remarks.
The mix of signals produced a whipsaw for global markets on Monday. Oil prices initially jumped and equities on Wall Street fell, only to rally strongly after Mr. Trump’s comments and fresh reports that Washington might ease restrictions on Russian energy. That combination of headlines helped flip sentiment over the course of the session.
"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, from demanding full surrender to declaring the mission ’very complete’, is a welcome development that should help settle nerves for today’s session in Asia, at least."
Retail investor risk-taking appeared to regain some footing after Monday’s selloff. Japan’s Nikkei 225 climbed 3.6% and South Korea’s Kospi surged 6.4%. The strength in Korea prompted the Korea Exchange to trigger a sidecar trading curb after futures rose more than 5%, pausing programme trading for five minutes.
The geopolitical backdrop, however, remained tense. Iran’s military warned it would escalate missile strikes in a further sign of defiance.
"If Iran does anything that stops the flow of oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far," Mr. Trump wrote in a post on Truth Social afterwards.
U.S. Treasury markets recovered after the spike in oil on Monday had stoked an inflation scare and raised the prospect of tighter policy in Europe later in the year. The yield on the U.S. 10-year Treasury was down 2.3 basis points at 4.109% as traders pushed out expectations for the Federal Reserve’s next rate cut. According to the CME Group’s FedWatch tool, the first reduction is now not seen until July.
Analysts at ING described the level of yields as still concerning. "Expect nominal yields to fall for a bit on a reversal trade. But don’t expect a dramatic structural rally in bonds," they wrote in a client note. "Remember, we still have clear inflation impulses to overcome, and the economy is down but not out."
The U.S. dollar index, which tracks the greenback against a basket of six major currencies, gave back all of its gains from the past week and was trading down 0.1% at 98.79. Gold edged down 0.1% to $5,133.55, remaining within the trading channel seen over the prior week.
Cryptocurrencies held to recent ranges. Bitcoin was up 0.2% at $69,127.60, while ether was down 0.4% at $2,018.69.
Markets are navigating mixed signals from Washington and Tehran, balancing hopes for de-escalation against explicit warnings and demonstrations of support for Iran’s new leadership. Traders and investors remain sensitive to headlines that could quickly reverse sentiment in energy, bond and equity markets.