Asian Stocks Climb With Focus on Mideast Truce: Markets Wrap

(Bloomberg) — Stocks in Asia edged higher as the Israel-Iran truce appeared to hold and Treasury traders ramped up bets for US interest rate cuts. 

MSCI’s gauge for Asian equities climbed 0.3% on Wednesday following a more than 2% rise in the previous session, when US President Donald Trump announced a ceasefire between the Middle East rivals. US equity futures were little changed after the S&P 500 climbed 1.1% and the Nasdaq 100 rose 1.5% on Tuesday, notching its first record since February. 

Treasuries and a gauge of the dollar steadied. The benchmark 10-year yield shed five basis points on Tuesday after Federal Reserve Chair Jerome Powell said “many paths are possible” for monetary policy, with data showing weakening consumer confidence. Traders continued to keep a close eye on the Middle East as the nascent peace deal remains precarious. Iran and Israel appeared to honor the agreement after Trump lashed out at both side for early breaches. 

“The geopolitical risks have abated but the ceasefire doesn’t exactly look to be ironclad at this stage,” said Tim Waterer, chief market analyst at KCM Trade in Sydney. “The ceasefire has given risk assets a reason to track higher again albeit in a slightly tentative fashion.” 

Oil rebounded — after posting the biggest two-day decline since 2022 — as traders assessed the ceasefire and an industry report that pointed to another drop in US crude stockpiles.

The dollar was weaker against most major peers. Asian currencies including the Philippine peso and Indonesia’s rupiah strengthened for a second day. The Australian dollar swung after monthly inflation data missed estimates. 

Powell’s remarks before the House Financial Services Committee came on the heels of the Fed’s decision last week to stay on hold. While the Fed chair largely maintained his call for patience as the economy absorbs the impact of trade tariffs, he said that lower inflation and weaker labor hiring could lead to an earlier rate cut. 

“If it turns out that inflation pressures do remain contained, then we will get to a place where we cut rates, sooner rather than later,” Powell told lawmakers in response to a question about the possibility of a July move. “But I wouldn’t want to point to a particular meeting. I don’t think we need to be in any rush because the economy is still strong.”

Read: Bond Traders Boost Bets That US 10-Year Yield to Dive Toward 4% 

Money markets fully priced in two Fed cuts by the end of 2025, with a first move in September far more likely than next month — though bets on a July reduction edged up from last week. 

“The Fed will probably wait for a couple of more data points before they are ready to actually cut interest rates,” Chetan Seth, Asia-Pacific equity strategist at Nomura Holdings, said on Bloomberg TV. “I don’t think he will commit until they have more evidence to embark on a rate cut.” 

Fed Bank of Minneapolis President Neel Kashkari said officials need more clarity on how tariffs will impact prices even as recent inflation data has been “quite positive.” His New York counterpart John Williams said it’s “entirely appropriate” to hold rates to analyze impacts of policy changes. Fed Governor Michael Barr said he anticipates tariffs will drive up inflation and expressed support for a wait-and-see approach on rates.

Fed Bank of Cleveland chief Beth Hammack said policymakers may hold borrowing costs steady for some time. Meantime, Boston Fed President Susan M. Collins said the modestly restrictive stance is necessary. 

Trump on Tuesday surprised both oil traders and officials in his own government by appearing to undermine years of US sanctions on Iran, giving its biggest customer China the green light to carry on buying the Islamic Republic’s oil as he seeks to bolster the ceasefire with Israel.

In Asia, the Bank of Thailand is expected to keep its policy rate steady. South Korea’s bid for a developed-market status hit a setback after MSCI Inc. kept the country in the emerging-market category following a review. Indonesia’s Finance Minister Sri Mulyani Indrawati stressed that the government is committed to fiscal discipline while rolling out the president’s priority programs.

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 1:23 p.m. Tokyo time
• Nikkei 225 futures (OSE) rose 0.3%
• Japan’s Topix fell 0.2%
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng rose 0.8%
• The Shanghai Composite rose 0.3%
• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1616
• The Japanese yen was little changed at 144.95 per dollar
• The offshore yuan was little changed at 7.1676 per dollar
• The Australian dollar rose 0.1% to $0.6498
• The British pound was unchanged at $1.3615

Cryptocurrencies

• Bitcoin rose 0.1% to $106,276.62
• Ether fell 0.3% to $2,443.94

Bonds

• The yield on 10-year Treasuries was little changed at 4.30%
• Japan’s 10-year yield declined two basis points to 1.395%
• Australia’s 10-year yield declined two basis points to 4.13%

Commodities

• West Texas Intermediate crude rose 1.4% to $65.28 a barrel
• Spot gold rose 0.2% to $3,328.83 an ounce

This story was produced with the assistance of Bloomberg Automation.

 

–With assistance from Hoi Yuet Woo and Aya Wagatsuma.

©2025 Bloomberg L.P.