Asian Markets Tread Carefully as Global Rally Meets Geopolitical Stasis

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.1%, buoyed by a 2.1% surge in South Korean markets, even as the Nikkei 225 dipped 0.3%. The optimism stems from July U.S. manufacturing figures, which hit a four-year peak and propelled the Dow Jones Industrial Average to a fresh record. Chris Weston, head of research at Pepperstone Group, noted that if this constructive sentiment holds, regional buyers are likely to provide necessary support for risk assets throughout the session.

Energy markets remain subdued; Brent crude rose 0.6% to $84.29 a barrel, struggling to recover from Monday’s three-week low. The stagnation follows conflicting signals regarding U.S.-Iran relations, with President Donald Trump citing goodwill gestures while Tehran denies any active negotiations. Meanwhile, the U.S. dollar index hovered near a two-month low at 99.99, despite a slight uptick against the yen to 157.625. Traders are now recalibrating for September, with CME Group’s FedWatch tool showing a 65% probability of a 25-basis-point rate hike. New York Fed President John Williams maintained that while inflation is expected to ease, the central bank remains prepared to tighten policy further should price pressures persist.