Asian equity markets staged a recovery on Tuesday, reversing a three-day losing streak as renewed diplomatic engagement in the Middle East eased supply fears.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.25%, signaling a return of risk appetite among regional investors.
The rally was underpinned by a pullback in energy prices, which retreated from one-month highs following reports of tangible progress in mediation efforts between the United States and Iran.
This development marks a continuation of the sentiment shift that began earlier in the week, when initial reports of diplomatic breakthroughs sparked broad-based gains across Asian bourses. The improved geopolitical outlook has reduced risk aversion, allowing equities to decouple from the energy-driven volatility that had weighed on the region.
Brent crude, which had surged on fears of supply disruption, softened as markets priced in a lower probability of immediate conflict.
The cross-asset reaction highlights the sensitivity of Asian markets to Middle East stability, with energy costs acting as a key transmission mechanism for geopolitical risk.