Asian Markets Rally as South Korea's Kospi Reaches Record High Amid US-Iran Diplomatic Developments

Asian Markets React Positively to US-Iran Negotiations

Asian markets experienced a positive reaction on Tuesday, May 26, as optimism surrounding a possible breakthrough in US-Iran peace negotiations lifted investor sentiment. The South Korean Kospi reached a new record high, climbing to an intraday high of 8,094.90, while the small-cap Kosdaq gained 2.12% in early trading.

In contrast, Japan's Nikkei 225 edged down 0.18% due to profit booking, and the Topix slipped 0.36%. Notably, the Nikkei 225 had crossed the 65,000 mark for the first time on Monday during thin holiday trading across Asia. Australia's S&P/ASX 200 declined 0.17% at the open, while Hong Kong's Hang Seng index futures stood at 25,430, below the benchmark index's previous close of 25,606.03 on Friday.

Back home, Gift Nifty was trading near the 24,068 mark, around 5 points higher than the previous close of Nifty futures, signaling a flat opening for the Indian benchmark indices.

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

The positive sentiment in Asian markets was driven by President Donald Trump's comments on Monday, stating that talks with Iran were "progressing well," while cautioning that the US could restart attacks if negotiations did not succeed. Oil prices showed a mixed trend following Trump's remarks, with July delivery West Texas Intermediate futures declining 5.37% to $91.41 per barrel, while July Brent crude futures gained nearly 1.75% to $97.82 per barrel.

Traders are increasingly betting that the worst phase of the Middle East energy crisis may have passed, after months of conflict disrupted oil supplies, heightened inflation concerns, and pushed bond yields upward. A potential agreement to reopen the Strait of Hormuz and prolong the US-Iran ceasefire could further reduce pressure on oil markets and fuel the AI-driven rally in equities.

US stock market futures moved higher, with Dow Jones Industrial Average futures advancing 0.73%, S&P 500 futures climbing 0.78%, and Nasdaq-100 futures surging 1.14%. The Dow Jones Industrial Average touched a fresh intraday record high on Friday, supported by AI-led market momentum and growing optimism around negotiations aimed at ending the war. The blue-chip index climbed to an intraday peak of 50,712.24 points and was later trading 0.6% higher, surpassing its previous record high of 50,512.79 recorded on February 10.

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