Investors Bet on Decline of Peak Uncertainty as Asia Stocks Rise

Asian Stocks Rise as Investors Look Past Middle East Tensions

Asian stocks rebounded on Monday, with the MSCI Asia Pacific Index rising as much as 0.8% and the MSCI Emerging Markets Index erasing all of its losses since the start of the almost two-month war in Iran. US futures also pared earlier losses of as much as 1.1%. Oil and the dollar retreated from session highs, suggesting investors are positioning for peak uncertainty to have passed, according to analysts and strategists.

Investors are shifting their focus back to fundamentals and the prospect of further talks, with a more favorable outlook for negotiations and a revival of the artificial intelligence trade driving sentiment. The earnings season, which is unfolding, is also drawing renewed attention. Analysts point out that a potential off-ramp for the conflict is emerging, as the two sides remain open to talks.

Table: Comparison of Market Indices

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

Positioning remains light, with trading volumes across most Asian markets muted on Monday. The metric on Korea's Kospi stock index, for example, was about 33% lower than the average of the past month. The uncertainty was extended after President Donald Trump and Iranian officials offered disparate views on the next stage of the war, raising doubts over the prospects for peace talks before a ceasefire deadline.

Despite the ongoing tensions, market watchers highlight the difficulty of taking a bearish stance as Asia's major benchmarks, including Japan's Nikkei 225 and Taiwan's Taiex index, rebounded to record highs. The ratio of short-selling to overall daily trading of Japanese stocks has decreased since the beginning of the month, with the 5-day moving average falling to about 38.8% as of Friday from 41.8% on April 3.

The rally in chipmakers is driving the rise in South Korean stocks, which rose more than 1% Monday on the back of a rally in chipmakers as the AI trade swings back into investor focus. Taiwan Semiconductor Manufacturing Co. raised its revenue outlook for 2026 on solid AI chip demand, while Samsung Electronics Co. posted an eightfold jump in quarterly profit. Earnings from Korean memory chipmaker SK Hynix Inc. due Thursday are among key upcoming catalysts for the tech trade.

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

Table: Comparison of Tech Earnings

Overall, investors are positioning for peak uncertainty to have passed, and Asia's tech earnings are showing resilience amid the war.