Asian stock markets edged slightly higher on Tuesday, pulling back from the stronger gains seen Monday when news broke of a preliminary peace agreement between the United States and Iran. As the initial excitement surrounding the deal began to settle, investors turned their attention to upcoming central bank decisions around the world.
The early trading mood across the region was more restrained, with markets adopting a wait-and-see approach regarding developments in the Gulf. Oil prices, which had already fallen to a three-month low overnight, showed only modest movement — Brent crude futures rose 51 cents, or 0.6%, to $83.74 per barrel. Shipping companies in Asia and Europe cautioned that rebuilding enough confidence to resume transit through the Strait of Hormuz could take several weeks.
The MSCI index tracking Asia-Pacific shares outside of Japan gained 0.2%, with South Korean stocks leading the way. Japan’s Nikkei 225 slipped 0.2%, pulling back from a record high, while S&P 500 e-mini futures dipped 0.1%.
Although U.S. President Donald Trump’s announcement of the Iran agreement brought a wave of investor relief on Monday, the deal is also expected to create tensions between Washington and Israel.
Analysts from Westpac described the development in a research note, saying, “While it is an important diplomatic breakthrough that should remove a key source of market volatility, the durability of the deal is likely to be tested in the future.” They added, “Many sticking points, including the fate of Iran’s nuclear programme, were left to be resolved in subsequent negotiations.”
On Wall Street Monday night, both stocks and bonds surged. The S&P 500 climbed 1.7% and the Nasdaq Composite jumped 3.1%, while the Dow Jones Industrial Average and Europe’s STOXX 600 both closed at all-time highs.
Looking beyond geopolitical developments, traders are closely watching a series of central bank announcements. The Bank of Japan is widely expected to raise its benchmark interest rate to a 31-year high on Tuesday. Deputy Governor Shinichi Uchida is scheduled to hold a press briefing following the meeting, stepping in for Governor Kazuo Ueda, who will be absent due to medical treatment.
Analysts from Mitsubishi UFJ noted in a research report, “We do not anticipate any major changes to the Bank’s assessment of current conditions.” They also wrote, “We expect Deputy Governor Uchida’s press conference, including the rationale he presents for the rate-hike decision, will be based largely on Governor Ueda’s June 3 speech,” adding that “Mr. Uchida is also likely to follow the governor’s remarks when discussing future policy decisions.”
Separately, a Reuters poll of economists indicates the Reserve Bank of Australia is expected to pause its rate-tightening campaign when it meets later Tuesday.
The U.S. dollar index, which tracks the greenback against a group of six major currencies, held steady at 99.66, staying within the narrow trading range it has maintained throughout the week. The yield on the 10-year U.S. Treasury bond edged up 0.8 basis points to 4.475%, while gold rose 0.2% to $4,313.87.
In digital currency markets, bitcoin fell 0.3% to $66,245.97, while ether dropped 1.2% to $1,793.70.
