SINGAPORE, 3 April 2026 – Asian equities are expected to open higher, tracking a late rebound on Wall Street as investors grow cautiously optimistic that tensions in the Middle East may gradually ease.
U.S. markets staged a modest recovery overnight, with the S&P 500 and Nasdaq both edging higher after reversing earlier losses, signalling improved sentiment despite ongoing geopolitical uncertainty.
Wall Street Rebound Sets the Tone
The turnaround in U.S. equities came after reports suggested potential progress in managing disruptions around the Strait of Hormuz, one of the world’s most critical oil shipping routes.
Oil prices, while still elevated above US$100 per barrel, eased slightly from recent highs, providing some relief to equity markets that had been rattled by fears of prolonged supply disruptions.
This shift in sentiment helped lift futures in Asia, with early indicators pointing to gains across key markets.
Early Gains in Japan and Korea
Japan and South Korea are leading the initial momentum:
- Japan’s Nikkei 225 rose approximately 1.6%
- South Korea’s Kospi surged about 2.9%
These moves reflect a rebound in risk appetite following days of volatility driven by oil shocks and geopolitical escalation.
However, overall trading activity is expected to remain subdued, with several regional markets, including Australia, Hong Kong, Singapore, and Indonesia, closed for holidays.
Volatility Still Lingers Beneath the Surface
Despite the positive start, markets remain highly sensitive to developments in the Middle East.
Recent sessions have been marked by sharp swings:
- Oil prices surged past US$110 amid escalation fears
- Global equities traded mixed as investors balanced inflation risks and geopolitical uncertainty
Even as optimism emerges around potential de-escalation, the lack of a clear resolution continues to cloud the outlook.
Key Drivers for Asian Investors
For investors across Asia, several factors will shape market direction in the near term:
- Oil price trajectory: Any sustained decline could support equities
- Geopolitical developments: Progress or setbacks in the Iran conflict remain pivotal
- U.S. economic data: Upcoming payrolls data may influence global rate expectations
With U.S. markets closed for Good Friday, liquidity conditions may also be thinner, potentially amplifying volatility.
A Fragile Recovery Narrative
The expected uptick in Asian equities reflects a fragile recovery narrative—one that hinges heavily on geopolitical outcomes rather than fundamental economic shifts.
While short-term optimism is building, markets remain in a reactive mode, with sentiment likely to swing quickly as new developments unfold.
Asian markets may open higher, but conviction remains cautious.
