Asian Markets Rise as Oil Eases, US-Iran Hopes Boost Global Sentiment

Market sentiment globally improved after signals from U.S. Vice President JD Vance suggested that diplomatic engagement between Washington and Tehran remains possible, despite escalating tensions in the Strait of Hormuz.

Brent crude, the international benchmark, showed volatility, earlier surging sharply amid geopolitical risks but later easing, trading around USD 97.99 per barrel after touching a low of USD 96.60.

Overnight on Wall Street, U.S. equities exhibited resilience. The S&P 500 rose 0.6 per cent in late trading after recovering from an earlier dip, while the Dow Jones Industrial Average gained 102 points (0.2 per cent). The tech-heavy Nasdaq Composite outperformed, climbing 0.8 per cent. In the previous session, the S&P 500 had rallied 1.02 per cent to close at 6,886.24, its highest level since before the conflict, while the Nasdaq surged 1.23 per cent and the Dow added over 300 points.

Asian markets tracked these gains, opening higher on Tuesday. Japan's Nikkei 225 advanced 1.5 per cent, and Hong Kong's Hang Seng Index futures indicates a firm opening.

However, geopolitical tensions remain a key overhang. The U.S. has initiated a blockade of Iranian shipments in the Strait of Hormuz, escalating pressure after stalled ceasefire talks. Iran has warned that such actions could further drive up global energy prices, keeping oil markets volatile. Brent crude had earlier surged as much as 4.4 per cent to settle near USD 99.36 per barrel, significantly higher than pre-conflict levels of around USD 70.

Back home, Indian benchmark indices Nifty 50 and BSE Sensex ended Monday's session in the red, weighed down by heightened West Asia tensions after U.S. President Donald Trump ordered a shutdown of the Strait of Hormuz following failed negotiations with Iran. Investors are expected to remain cautious in the near term amid persistent geopolitical uncertainty.

That said, domestic macroeconomic indicators offer some support. India's recent CPI inflation print showed only a modest uptick, with limited pass-through from elevated energy prices.

On the modest rise in CPI Inflation rate, Dipti Deshpande, Principal Economist at Crisil said, "Despite a full month since the West Asia conflict began, retail inflation showed relatively low impact of the energy shock."

Deshpande noted that while the government announced an increase of Rs 60 in domestic LPG cylinder (LPG and PNG together has a small weight of 1.98% in CPI), it kept retail prices of petrol and diesel (combined weight of 4.8% in CPI) unchanged. Thus, retail inflation in March was fairly insulated from the energy price shock. Core inflation was contained by slower gold and silver inflation.

Additionally, early indication from derivatives markets remain positive, with GIFT Nifty rising over 1 per cent to 24,126, indicating a potentially strong opening when markets resume trading on Wednesday.

On the downside, concerns persist over the initial forecast of a below-normal monsoon by the India Meteorological Department, which could elevate food inflation and weigh on investor sentiment going forward.

- ANI