South Korea's Kospi index climbed to a record high on Tuesday, advancing 3.46% to 8,119.11 in early trade after markets reopened following a public holiday. According to latest reports, the small-cap Kosdaq gained 2.12% in early trading, demonstrating broad-based optimism across Korean markets. The positive momentum reflects investor sentiment buoyed by hopes for a US-Iran breakthrough in peace negotiations. Japan's Nikkei 225 fell 0.33% to 64,941.15 due to profit booking, while Australia's S&P/ASX 200 slipped 0.52% to 8,647.20. Hong Kong's Hang Seng index futures stood at 25,430, below the benchmark index's previous close of 25,606.03 on Friday. Gift Nifty was trading at 24,140.50, up from Monday's close of 24,031.70, signaling a positive opening for Indian benchmark indices.
US Treasuries experienced significant gains as yields fell across the curve following Trump's positive comments on Iran negotiations. As reported by CNBC TV18, the yield on the US government note with a two-year maturity decreased by six basis points to 4.06%, while the yield on the note with a ten-year maturity decreased by six basis points to 4.50%. Thirty-year rates dropped to 5.03%, a four-basis-point decrease. According to Bloomberg, cash trading resumed after a holiday with investors growing more optimistic about a potential US-Iran deal, with two-year yields falling six basis points to 4.05%, ten-year yields dropping six basis points to 4.50%, and thirty-year yields declining four basis points to 5.03%. US stock futures moved higher ahead of Tuesday trading, with S&P 500 futures rising 0.78%, Nasdaq-100 futures gaining 1.14%, and Dow Jones Industrial Average futures adding 371 points, or 0.73%. On Friday, the Dow Jones Industrial Average touched a fresh intraday record high of 50,712.24 points, surpassing its previous record high of 50,512.79 recorded on February 10.
Oil prices showed mixed reactions following Trump's latest comments on Middle East negotiations. As reported by CNBC TV18, Brent crude rose above $98 per barrel after President Donald Trump stated on Monday that talks with Iran to reach a temporary agreement to prolong their ceasefire and reopen the Strait of Hormuz were proceeding nicely. However, July delivery West Texas Intermediate futures declined 5.37% to $91.41 per barrel, while July Brent crude futures, the global benchmark, gained nearly 1.75% to $97.82 per barrel. According to Bloomberg, President Donald Trump said this week that negotiations with Iran on an interim deal to extend their ceasefire and reopen the Strait of Hormuz were 'proceeding nicely', though he warned the US could restart attacks if the talks failed. Traders are increasingly betting that the worst phase of the Middle East energy crisis may have passed, after months of conflict disrupted oil supplies, heightened inflation concerns, and pushed bond yields upward. A potential agreement to reopen the Strait of Hormuz and prolong the US-Iran ceasefire could further reduce pressure on oil markets and fuel the AI-driven rally in equities.
Key sticking points remain unresolved in the ongoing negotiations, according to reports from CNBC TV18. Iran's Tasnim news agency reported that the draft agreement could still collapse because of US objections to several provisions, including Tehran's demand that frozen assets be released. Iran's Foreign Ministry Spokesman Esmail Baghaei told reporters that "a consensus was reached on many of the topics discussed, but no one can claim that the signing of an agreement is imminent." Tensions also remained as American and Israeli warplanes targeted several Iranian vessels south of Larak Island in the Strait of Hormuz, state-run Nour News reported, citing local sources. The US Central Command stated that it carried out "self-defense strikes" against Iranian missile launch sites and vessels allegedly attempting to deploy mines in the southern region of Iran. President Donald Trump on Monday said talks with Iran were "progressing well," while cautioning that the US could restart attacks if negotiations did not succeed. This highlights the fragile nature of the discussions, with the US maintaining military readiness even as diplomatic efforts continue.
Following the latest developments in US-Iran talks, markets have pared back expectations for near-term Federal Reserve tightening. As reported by Bloomberg, overnight-indexed swaps now fully price in a rate hike by March 2027 instead of December 2026 as seen at the end of last week. The extra yield investors demand to hold 30-year bonds over five-year notes also rebounded from the lowest level since May 2025 as some of the market's more hawkish Fed expectations eased. BlackRock Inc. is among those arguing the Fed has sufficient reason to cut rather than hike rates, with Navin Saigal, the firm's head of global fixed income for Asia Pacific, stating on Bloomberg TV that pressure on the labor market could justify the Fed staying on hold or cutting rates. This contrasts with investors betting Warsh will prioritize the Fed's inflation-fighting credibility over Trump's push for lower rates.
