Asian Markets Extend Gains Following Rally on Wall Street, Oil Prices Rise

Global Markets Report

Asia-Pacific Equities Rise on Optimism Over Strait of Hormuz

The MSCI Asia Pacific Index rose 0.8% at the open, driven by optimism that more tankers will be able to pass through the crucial Strait of Hormuz. Shares opened higher in Japan, South Korea, and Australia, as investors await a slate of central-bank meetings this week.

Oil Prices Rebound

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Brent crude prices advanced to around $102 a barrel early Tuesday, rebounding from a 2.8% drop in its previous session. The increase in oil prices has tempered inflation concerns, although US equity-index futures were slightly weaker, suggesting the optimism seen at the start of the week may be beginning to fade.

Risk Appetite Boosted by Reserve Release

Risk appetite was boosted by expectations that major economies could release petroleum reserves to offset potential supply disruptions. President Donald Trump renewed calls for allies to help safeguard the Strait of Hormuz, amid continued threats to flows through the vital shipping lane.

US Equities

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The S&P 500 notched its best day since February, led by technology shares. Nvidia Corp. climbed 1.7% after announcing it expects to generate at least $1 trillion in revenue from artificial-intelligence chips through the end of 2027.

Central Bank Meetings

This week's central-bank meetings will focus on the policy response to the crisis. The Federal Reserve is expected to hold rates steady on Wednesday, while the Bank of England and European Central Bank also meet. The Reserve Bank of Australia is widely expected to deliver a rate hike in Sydney later Tuesday.

Currency Markets

The yen is in focus as it edges closer to the 160-per-dollar mark, reflecting investors' concerns around Japan's heavy reliance on imported energy. Traders expect the Bank of Japan to keep interest rates on hold in its policy meeting later this week.