Asia-Pacific markets opened higher on Tuesday, buoyed by hopes for a resolution to the ongoing Middle East conflict, despite escalating tensions between the United States and Iran. President Donald Trump warned that 'lots of bombs [will] start going off' if no deal is reached before the ceasefire with Tehran expires Tuesday evening, threatening Iran with overwhelming military force. Iran's parliament speaker and top negotiator, Mohammad Bagher Ghalibaf, responded that Iran 'does not accept negotiations under the shadow of threats' and has prepared to 'reveal new cards on the battlefield' if necessary [3]. Despite these threats, a U.S. delegation was preparing to return to Pakistan for a potential second round of peace talks, and Reuters reported Iran is considering attending peace talks, though no decision had been made [2][3].
Market reactions were mixed. Asia-Pacific equities rose, with South Korea's Kospi up 1.58%, Japan's Nikkei 225 gaining 0.52%, and Australia's S&P/ASX 200 rising 0.20%. Hong Kong Hang Seng index futures were also higher. Overnight, S&P 500 and Nasdaq 100 futures added 0.1% and 0.2%, respectively, while the Dow Jones Industrial Average futures rose by 0.2%. However, during Monday's regular session, the S&P 500 and Nasdaq Composite declined by 0.24% and 0.26%, respectively, with the Nasdaq snapping its 13-day winning streak [3].
Commodity markets reflected the geopolitical uncertainty. Gold held steady above $4,800, trading near $4,825, as investors sought safe-haven assets amid renewed instability in the Middle East. A breakdown in US-Iran peace talks and a renewed blockade of the Strait of Hormuz have driven oil prices higher, stoking inflation fears and raising the bar for cutting rates. However, as of 8:00 p.m. ET, West Texas Intermediate futures for May delivery were 1.72% lower at $88.07 per barrel, and Brent crude futures for June delivery fell 1.02% to $94.51 per barrel [2][3].
In currency markets, the New Zealand Dollar (NZD) strengthened against the US Dollar (USD), with NZD/USD gaining momentum to around 0.5910. This followed hotter-than-expected domestic inflation data: New Zealand's Consumer Price Index (CPI) rose 3.1% year-on-year in Q1 2026, above the market consensus of 2.9%, and quarterly CPI inflation climbed to 0.9% from 0.6%, beating estimates of 0.8%. Analysts at Kiwibank and Westpac suggest that persistent sticky domestic inflation may force the Reserve Bank of New Zealand (RBNZ) to maintain a restrictive policy stance for longer than previously anticipated [1].
Looking ahead, the US March Retail Sales report is due later on Tuesday, projected to show a rise of 1.4% month-on-month compared to 0.6% in February. If the report shows softer-than-expected inflation in the US, this could weigh on the US Dollar and support USD-denominated commodity prices such as gold [2]. Ohsung Kwon, chief equity strategist at Wells Fargo, expressed optimism, stating, 'I think the economy is going to be fine for the next three months' [3].
CONCLUSION
Asia-Pacific markets are responding positively to hopes for US-Iran peace talks, despite threats of escalation and ongoing geopolitical uncertainty. Hotter New Zealand inflation data has strengthened the Kiwi, while gold and oil prices reflect investor caution. The upcoming US Retail Sales report and ongoing diplomatic developments will be key factors influencing market direction in the near term.