Asian stocks rise as Iran tensions ease; Japan, South Korea lead gains
Published Mon, Jul 27, 2026 · 09:36 AM
ASIAN stocks gained and oil dropped on Monday (Jul 27) as the US and Iran refrained from retaliatory strikes, easing concerns over potential disruptions to Middle East energy supplies after a recent escalation in the conflict.
Brent crude fell as much as 7.4 per cent to below US$90 a barrel, before paring losses as the US paused an almost two-week run of strikes against Iran. MSCI’s Asia-Pacific equities gauge rose 0.5 per cent, led by gains in South Korea and Japan.
Among the main moves across markets, the S&P 500 futures rose 0.9 per cent as at 9.01 am Tokyo time. The Hang Seng futures rose 0.2 per cent, Japan’s Topix rose 0.8 per cent and Australia’s S&P/ASX 200 rose 1 per cent.
Contracts for the Nasdaq 100 Index climbed 1.3 per cent and the US dollar, the haven of choice during the Middle East conflict, weakened against almost all of its Group-of-10 peers as tensions eased.
Treasuries rallied in early Asian trading as inflation concerns receded.
After striking Iran for 13 days, the US has apparently held off since late on Friday without explanation, raising questions about US President Donald Trump’s next move.
Iran’s army said on Sunday that Teheran had also suspended its military response. The pause came as Iranian and Omani officials held talks over shipping through the Strait of Hormuz, raising hopes that the key oil transit route may avoid further disruption.
“A resolution to the conflict would be a positive development,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Intelligence Lab. The pause in attacks raises “hopes that the two sides will enter negotiations”.
The lull in hostilities sets the tone for a pivotal week in global markets, with traders focused on whether the US Federal Reserve will raise interest rates on Wednesday, after the recent surge in oil prices fuelled inflation concerns.
Investors are also awaiting earnings from megacap technology companies after a recent backlash against heavy spending on artificial intelligence.
Tensions in the Middle East had sent oil prices soaring in July, overshadowing a tamer-than-expected reading on June consumer prices that seemed to offer officials breathing room to keep rates stable.
Add to that a demand boom fuelled by AI and the Trump administration’s announcements of new tariffs, and Fed watchers see the possibility of dissents at the Jul 28 to Jul 29 meeting if officials again leave policy unchanged.
Three days of Group-of-Seven central bank decisions begin with the Fed on Wednesday, followed by the Bank of England and the Bank of Japan.
While no changes are expected in interest rate policy, officials are likely to emphasise vigilance over the inflationary impact of higher energy prices.
“We think the Fed will probably not hike,” Krishna Guha, head of central bank strategy at Evercore ISI, wrote in a note.
“But we cannot take the probability too low given Warsh’s refusal to set out his strategy,” he said, referring to the new Fed chair Kevin Warsh.
Another key focus for markets will be earnings from megacap technology companies after a recent round of sell-offs in AI stocks rekindled doubts over whether billions of dollars being poured into infrastructure will generate commensurate returns.
The sell-off showed how much the narrative around AI and the Magnificent Seven tech behemoths has shifted.
This change makes for a tough setup heading into this week, with earnings from Microsoft and Meta Platforms due on Wednesday, followed by Apple and Amazon on Thursday. BLOOMBERG
