Crude oil prices fell sharply at the start of the week following reports of a pause in U.S.-Iran military strikes over the weekend.
The development has reignited hopes for a diplomatic resolution to the escalating conflict in the Middle East, prompting traders to rapidly unwind aggressive hedging positions that had been built up during the previous week's volatility.
The repricing of geopolitical risk has rippled across asset classes.
Government bonds surged, erasing losses from the prior session as investors rotated out of safe-haven demand.
In India, overnight index swap rates plunged in early trades as market participants adjusted to the reduced near-term threat of supply disruption.
The shift marks a notable reversal from Monday's sentiment, when Asian equity markets had retreated on fears that a peace agreement was slipping away.