Asian stock markets experienced significant declines on Tuesday, with the Nikkei 225 down nearly 1.1% to around 51,410, Shanghai 0.16% lower at 3,915, and Hang Seng dropping 0.4% to approximately 24,650, as persistent concerns about elevated oil prices weighed on investor sentiment despite improved hopes for an end to the month-long Middle East conflict [1]. The Wall Street Journal reported that U.S. President Donald Trump is willing to end the war with Iran even if the Strait of Hormuz remains closed, opting for a diplomatic approach to reopening the waterway and avoiding a prolonged military mission beyond his stated timeline of four to six weeks [1][2][3]. Tehran had previously achieved military dominance near the Strait of Hormuz, a passage accounting for nearly 20% of global energy supply, in retaliation for the killing of its top leaders by the U.S. and Israel [1].
European markets are set for a mixed open, with Germany's DAX up 0.5%, France's CAC 40 up 0.4%, the U.K.'s FTSE 100 flat to lower, and Italy's FTSE MIB just below the flatline, reflecting ongoing uncertainty about the prospects for a peace deal [3]. U.S. stock futures edged higher, with S&P 500 futures up 0.8% to near 6,400, while oil prices reversed course and dropped in overnight trading following the WSJ report [1][3]. The US Dollar Index (DXY) traded marginally lower at around 100.40–100.45, contributing to a slight uptick in the EUR/USD pair, which snapped a five-day losing streak and rose to near 1.1475 during the Asian session [1][2].
The continued closure of the Strait of Hormuz is expected to keep oil prices elevated, limiting investment capabilities for major energy-importing economies such as those in Asia and the Eurozone [1][2]. Elevated oil prices are also anticipated to be a drag on the Euro, as the Eurozone relies heavily on energy imports [2]. Investors are awaiting key economic data releases, including the flash Eurozone Harmonized Index of Consumer Prices (HICP) for March, expected to show a robust 2.7% year-on-year increase compared to the previous 1.9% [2]. Other notable releases include German retail sales, the final reading of U.K. GDP for Q4 2025, and earnings from Hermes International [3].
While Trump had previously threatened to expand attacks to Iran's civilian energy infrastructure if Tehran did not reopen the Strait of Hormuz, his current stance signals a preference for diplomacy and a limited military timeline [3]. Market reactions have been mixed, with riskier assets seeing some buying interest and oil prices dropping after initial gains, reflecting the complex interplay between peace prospects and ongoing supply disruptions [1][3].
CONCLUSION
Markets are responding to President Trump's willingness to pursue peace with Iran despite the continued closure of the Strait of Hormuz, which is keeping oil prices elevated and fueling volatility across global equities. While risk assets have seen some buying interest and oil prices have dropped following diplomatic signals, uncertainty remains high as investors await further economic data and clarity on the conflict's resolution. The ongoing situation is exerting significant influence on energy-dependent economies and currency markets.