Asian equities experienced a notable rise following a rally on Wall Street, driven by the US–Iran ceasefire which led to a sharp drop in oil prices and eased concerns about renewed inflation and further central bank rate hikes [1]. At the time of writing, Japan’s Nikkei 225 was up 1.85% near 56,900, Hong Kong’s Hang Seng Index increased by over 0.64% to near 25,900, China’s SSE Composite Index gained 0.77% to near 4,000, and South Korea’s Kospi rose 1.55% to near 5,870 [1].
Despite the positive momentum, traders remain cautious due to uncertainty regarding the longevity of the US–Iran ceasefire. Diplomatic talks expected in Islamabad this weekend have not been officially confirmed, adding to the risk aversion in the markets [1]. Additionally, Israel continues strikes on Hezbollah, although Prime Minister Benjamin Netanyahu has stated that Israel will soon begin direct negotiations with Lebanon. US President Donald Trump announced that US forces will stay deployed around Iran until full compliance with the ceasefire agreement is achieved [1].
Japanese stocks may face headwinds as expectations rise that the Bank of Japan (BoJ) could raise interest rates in April to counter inflation. Japan’s 10-year government bond yield climbed near 2.4% on Friday, approaching its highest level since 1998. Yields have surged since the Middle East conflict began, as higher energy prices fueled inflation concerns and strengthened bets on tighter BoJ policy [1].
In China, the Consumer Price Index (CPI) rose 0.9% year-on-year in March, down from 1.3% in February and below the 1.2% consensus. On a monthly basis, CPI fell 0.7% after a 1.0% increase previously. The Producer Price Index (PPI) rose 0.5% year-on-year, rebounding from a 0.9% decline and marking its first increase since September 2022, supported partly by higher energy costs amid disruptions in the Strait of Hormuz [1].
CONCLUSION
Asian stock markets rallied on the back of the US–Iran ceasefire, which eased inflation and rate hike concerns by lowering oil prices. However, ongoing geopolitical uncertainties and expectations of tighter monetary policy in Japan and China may temper further gains. Investors remain cautious as diplomatic developments and central bank actions continue to shape market sentiment.