Markets React: Asian Stocks Climb Amid U.S.-Iran Tensions

Asian stocks rose for the second day amid tensions between the U.S. and Iran. As global central banks prepare for policy meetings, investors are on edge. U.S. allies have rebuffed Trump's call for military support in the Middle East, affecting oil prices and market dynamics.

Markets in Asia saw a second consecutive day of gains on Tuesday as investors faced a busy central bank calendar and continued tensions in the Middle East. The ongoing conflict between the U.S. and Iran has left markets jittery, trying to assess the potential economic fallout from the situation and any potential policy actions it might prompt.

The MSCI Asia-Pacific index outside Japan increased 1.1%, with South Korea's Kospi leading at 2.3%, while Japan's Nikkei 225 remained steady. Wall Street's S&P 500 rose 1.0% following a streak of losses, thanks to gains in AI stocks, though it stays below pre-conflict levels. Chris Weston from Pepperstone Group noted the rally feels more like a positioning squeeze than a new trend.

Brent crude surged 3.4% as Trump's plea to allies for naval support in the Strait of Hormuz was rejected. The Reserve Bank of Australia raised rates to 4.1%, but the close decision casts doubt on future moves. Meanwhile, the Bank for International Settlements advised caution amid energy price shocks, emphasizing the importance of a measured response.

(With inputs from agencies.)