Asia-Pacific markets moved higher on Tuesday, supported by a sharp decline in oil prices that helped ease investor concerns amid tentative signs of de-escalation in the Middle East conflict.
Regional sentiment improved after United States President Donald Trump said he had instructed the military to delay planned strikes on Iran’s power plants and energy facilities for five days, following discussions with Iranian officials.
However, Iranian state media disputed the claim, denying that any talks had taken place between Washington and Tehran.
By 11:45 am AEDT (12:45 am GMT), Australia’s S&P/ASX 200 rose 0.6%, Japan’s Nikkei 225 gained 1.3%, and South Korea’s KOSPI 200 led regional advances with a 2.4% jump.
Economic data releases across the region painted a mixed picture. In Japan, headline inflation eased for a fourth consecutive month in February as the economy cooled alongside stabilising food prices.
The consumer price index (CPI) slowed to 1.3%, its lowest level since March 2022 and below the central bank’s 2% target, down from 1.5% in January.
Core inflation, which excludes fresh food prices, moderated to 1.6%, missing expectations of a 1.7% increase and down from 2% previously. Meanwhile, “core-core” inflation, which strips out both fresh food and energy, eased slightly to 2.5% from 2.6%.
Purchasing managers’ index (PMI) data from S&P Global also pointed to moderating momentum in Japan’s economy. Manufacturing PMI came in at 51.4, below expectations and easing from the prior month, while services PMI fell to 52.8.
S&P Global noted: "Data signalled softer expansions in both manufacturing and service sector activity in Japan in March, leading to the slowest rise in overall private sector output for three months.
"At the same time, Japanese firms recorded weaker increases in new orders and employment, while confidence around the year-ahead slipped to the lowest for nearly a year amid concerns around the war in the Middle East. The latter was reportedly a key driver of inflation"
In South Korea, producer prices rose for a sixth consecutive month in February, driven by higher agricultural costs and elevated global oil prices. The producer price index (PPI) increased 0.6% month-on-month while posting the fastest annual rise since July 2024 at 2.4%.
Australian data also highlighted emerging weakness. PMI figures showed manufacturing slipping to 50.1 from 51 previously, while services dropped sharply to 46.6 from 52.8, indicating contraction.
S&P Global said: "The Australian private sector ended the first quarter of 2026 in contraction, according to the latest flash PMI® data by S&P Global. The reduction in activity was the first for a year-and-a-half as demand faltered.
"The decline in output was the strongest recorded since the end of 2023, owing largely to a solid drop in services activity which fell for the first time in over two years. Meanwhile, Australian manufacturers posted a fractional dip in output."
Overnight in the United States, equities finished higher, with the Dow rising 1.4%, the S&P 500 gaining 1.2%, and the Nasdaq Composite advancing 1.4%.
Commodity markets saw notable moves, with Brent crude falling 10.9% to settle at US$99.94 per barrel, while spot gold declined 2% to US$4,406.51 per ounce.
Elsewhere, Chinese markets ended sharply lower on Monday, with the Shanghai Composite falling 3.6% and the CSI 300 losing 3.3%.
Hong Kong’s Hang Seng Index dropped 3.5%, while India’s BSE Sensex declined 2.5%.
European markets delivered mixed results, with the UK’s FTSE 100 slipping 0.2%, while Germany’s DAX rose 1.2% and France’s CAC 40 gained 0.8%.
