Shares wavered in Asia on Tuesday after a drop in oil prices helped send the U.S. stock market to its best day since the war in Iran began.
The reprieve in prices for crude was short-lived, with Brent crude climbing nearly 3% early Tuesday to $103.17 a barrel. U.S. benchmark crude also climbed, to $96.20 after dipping to about $93 a barrel on Monday.
U.S. futures fell back, with the contracts for the S&P 500 and the Dow Jones Industrial Average down 0.3%.
In Asian trading, Tokyo’s Nikkei 225 gained 0.4% to 53,928.25 and the Kospi in South Korea jumped 2.4% to 5,683.61.
Hong Kong’s Hang Seng surged 1% to 26,088.07, while the Shanghai Composite index edged less than 0.1% lower, to 4,083.03.
In Australia, the S&P/ASX 200 gained 0.3% to 8,606.60 after the central bank hiked its benchmark interest rate to 4.1%.
Citing higher fuel prices, the Reserve Bank of Australia on Tuesday lifted the cash rate from 3.85% which it set at its Feb. 3 meeting in response to surging inflation. That rise was Australia’s first since November 2023.
Taiwan’s Taiex rose 1.4% and India’s Sensex was up 0.1%.
On Monday, the S&P 500 climbed 1% to 6,698.38 for its biggest gain in five weeks. The Dow Jones Industrial Average added 0.8% to 46,946.41. The Nasdaq composite jumped 1.2% to 22,374.18.
The driver for markets has been oil prices, which have spiked from roughly $70 before the United States and Israel began their attacks on Iran. In response, Iran has nearly halted traffic through the narrow Strait of Hormuz, where a fifth of the world’s oil typically sails from the Persian Gulf to customers worldwide. That has oil producers cutting production because their crude has nowhere to go.
The worry in financial markets is that if the strait remains closed for a long time, it could keep enough oil off the market to drive inflation up to a debilitating level for the global economy.
“The panic is still there, just dialled down a notch as crude slipped off the boil. Brent easing back toward $100 flipped the tape from bunker mentality to opportunistic risk-taking in a heartbeat,” Stephen Innes of SPI Asset Management said in a commentary.
President Donald Trump over the weekend demanded that other countries hurt by the closure of the Strait of Hormuz “take care of that passage” and said his country “will help – A LOT!”
The U.S. and Israel have kept pummeling what they describe as military targets in Iran’s capital, and Israel stepped up its campaign against Iran-backed militants in Lebanon. More than 1 million people have been displaced in Lebanon — roughly 20% of the nation’s population — as U.N. peacekeepers say Israel is massing ground troops along the border.
Uncertainty over the war’s scope and duration have roiled financial markets since the war began just over two weeks ago, though markets have a track record of bouncing back relatively quickly from military conflicts. Many professional investors are expecting that to be the case again, if oil prices don’t go too high for too long. That has helped keep U.S. stock prices near their record levels.
Higher prices are complicating the Federal Reserve’s mission of balancing growth and inflation as President Donald Trump pushes the central bank to slash interest rates. Traders do not expect the Fed to cut rates at its policy meeting that wraps up on Wednesday.
Nvidia, whose chips are powering much of the world’s move into artificial-intelligence technology rose 1.6% on Monday as its CEO, Jensen Huang, talked up AI’s possibilities at a conference, saying he foresaw $1 trillion in demand for AI chips through 2027. It was the strongest single force lifting the S&P 500.
In other dealings early Tuesday, the U.S. dollar rose to 159.32 Japanese yen from 159.05 yen. The euro slipped to $1.1496 from $1.1507.
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Associated Press writer Rod McGuirk in Melbourne, Australia, and AP Business Writers Matt Ott and Stan Choe contributed.