Asian equity markets were mixed on Tuesday, tracking US stock index futures. Japan\u2019s Nikkei 225, Thailand\u2019s SET Index, Indonesia\u2019s IDX Composite, and Malaysia\u2019s KLCI index fell, while South Korea\u2019s Kospi and Australia\u2019s S&P\/ASX 200 rose.<\/p>\n
US President Donald Trump set a deadline linked to Iran reopening the Strait of Hormuz: Tuesday, 8 PM Eastern Time (00:00 GMT Wednesday). He warned of action against civilian infrastructure if no deal is reached, while Iran rejected a ceasefire proposal and called for a permanent end to the conflict.<\/p>\n
Crude Oil prices rose to a four-week high amid geopolitical uncertainty, raising inflation concerns. Markets are also pricing in the chance of a US Federal Reserve rate rise by the end of this year.<\/p>\n
Attention is turning to US consumer inflation data due on Friday, covering the period of the Middle East conflict. Geopolitical developments remain central, with reduced expectations of a last-minute US\u2013Iran agreement and the risk of further US military action.<\/p>\n
Asia is described as contributing around 70% of global economic growth and includes major indices such as the Nikkei 225 and the Kospi, plus China\u2019s Hang Seng, Shanghai Composite, and Shenzhen Composite. Sector exposure varies, with technology, financial services, manufacturing, retail, and e-commerce all represented, alongside risks from politics, conflict, disasters, and currency swings.<\/p>\n
We remember the caution in the markets last year during the US-Iran standoff over the Strait of Hormuz. Today, with renewed tensions flaring up in the Middle East, we are seeing a similar pattern of investor nervousness emerge. Consequently, the CBOE Volatility Index (VIX) has climbed over 15% in the past two weeks, making long VIX futures an interesting play to hedge against a sudden market downturn.<\/p>\n
Last year\u2019s conflict pushed crude to a four-week top, stoking inflation fears, a scenario that is repeating itself now. With WTI crude recently breaking past $90 a barrel for the first time since late 2025, inflation expectations are again on the rise. We see traders increasingly using call options on oil futures and energy sector ETFs to profit from this upward momentum.<\/p>\n
The threat of a Fed rate hike weighed on sentiment in 2025, and this hawkish pressure is even stronger today. The latest US Consumer Price Index for March 2026 came in hot at 3.8%, well above the central bank’s target. As a result, the CME FedWatch Tool now shows a 70% probability of a 25-basis-point hike at the next meeting, prompting a buildup of short positions in Treasury note futures.<\/p>\n
We saw Asian markets react with caution last year, and a similar divergence is happening now. Japan’s Nikkei 225 is down nearly 4% over the past month, as high energy costs threaten its manufacturing and technology sectors. In contrast, traders are looking at call options on indices in energy-exporting nations like Malaysia, anticipating that higher oil revenue will boost their economies.<\/p>\n
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