Global equity markets mostly advanced on Tuesday after US President Donald Trump said that Israel and Hezbollah had agreed to scale back hostilities, easing concerns over further escalation in the Middle East.
In Europe, France’s CAC 40 climbed nearly 1.0 per cent in early trade to 8,223.71, while Germany’s DAX gained 1.1 per cent to 25,275.57. The United Kingdom’s FTSE 100 added 0.3 per cent to reach 10,372.39, supported by improved risk sentiment across global markets.
US equity futures pointed to a slightly weaker opening, with Dow Jones Industrial Average futures down 0.3 per cent at 51,004.00. Futures linked to the S&P 500 slipped 0.1 per cent to 7,605.75, indicating cautious trading ahead on Wall Street despite broader global gains.
Asian markets delivered a mixed performance. Japan’s benchmark Nikkei 225 declined 0.3 per cent to close at 66,734.24, while South Korea’s Kospi edged up 0.2 per cent to 8,801.49. Hong Kong’s Hang Seng index outperformed regional peers, jumping 2.5 per cent to 26,038.32. China’s Shanghai Composite also gained 0.4 per cent to finish at 4,075.10.
Australia’s S&P/ASX 200 ended marginally lower, slipping less than 0.1 per cent to 8,724.40, reflecting cautious sentiment in the Asia-Pacific region.
In energy markets, crude oil prices eased but remained elevated. US benchmark crude fell $1.25 to $90.91 per barrel, while Brent crude dropped $1.49 to $93.49 per barrel. Despite the decline, prices continue to trade well above the roughly $70 levels seen before the conflict escalation.
Market participants are closely watching developments surrounding diplomatic efforts involving the United States and Iran, particularly discussions around reopening the Strait of Hormuz, a critical global oil shipping route. Any progress in this area is expected to ease supply concerns and reduce inflationary pressures linked to energy costs.
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Japan, which depends heavily on oil imports, has so far managed to limit the impact of higher crude prices through strategic stockpile releases. However, analysts warn that sustained supply disruptions could eventually feed into broader inflationary pressures.
“Crude shortages have already forced refiners across Asia and Europe to aggressively cut processing levels,” said analyst Stephen Innes. “The pressure is no longer confined to crude inventories; it is now spreading across refined products such as gasoline, diesel, jet fuel, LPG and naphtha, all of which are essential for economic activity.”
Earlier in the week, tensions escalated after the United States said it had struck Iranian radar and drone installations following Tehran’s downing of a US surveillance drone. Iran, in turn, claimed it had targeted US forces in Kuwait with missile strikes, which Washington said were intercepted.
Trump said the reported de-escalation between Israel and Hezbollah followed his conversations with Israeli Prime Minister Benjamin Netanyahu and indirect communication with the Lebanon-based militant group through mediators.
In currency markets, the US dollar strengthened slightly to 159.73 yen from 159.66 yen in the previous session. The euro also edged higher, trading at $1.1648 compared to $1.1631 earlier.
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