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Asian Stocks Climb on Rate Hopes Despite Middle East Conflict

Asian markets posted gains on Tuesday as investors weighed a crowded central‑bank calendar against escalating Middle‑East tensions. The MSCI broadest Asia‑Pacific index outside Japan rose 0.9%, driven by a 2.4% surge in South Korea’s cost P index and a modest 0.3% lift in Japan’s Nikkei 225, while U.S. S&P 500 e‑mini futures slipped 0.3%. The Reserve Bank of Australia led the policy narrative, raising its benchmark rate to 4.1% for the second consecutive meeting, the first major central‑bank move of the week. This set the tone for the Federal Reserve, European Central Bank, Bank of England and Bank of Japan, all expected to hold rates steady as they assess the economic fallout from President Donald Trump’s declared war with Iran. Meanwhile, the Japanese yen weakened 0.2% to just under 160 per dollar, hovering near a psychologically important level, though authorities signaled a higher threshold for intervention amid rising oil prices. Geopolitical headlines featured Trump’s request for U.S. warships to escort tankers through the Strait of Hormuz, which was rebuffed by several allies, prompting Brent crude to jump 2.7% to $12.89 a barrel. The BoJ governor noted that underlying inflation is gradually accelerating toward the 2% target, while gold held steady and cryptocurrencies posted modest gains, with Bitcoin up 2% near $76,000. The rally underscores that Asian investors are currently prioritizing monetary‑policy expectations over geopolitical risk, a stance that could shape capital flows and risk appetite ahead of the upcoming central‑bank decisions. Persistent oil‑price pressure and a near‑160 yen also flag potential volatility if the Middle‑East conflict deepens or if policymakers adjust their stance.