Crude oil prices rebounded on Tuesday, casting doubt on the durability of the recent equity rally driven by hopes for a swift diplomatic resolution to the U.S.-Iran conflict.
While European stocks climbed alongside U.S. futures, the strength in energy markets suggested investors remain skeptical that the two-month-old war will be resolved quickly through negotiations.
The divergence highlights a cautious market stance.
Although Asian markets had posted gains earlier in the session on optimism that mediators are engaging, the resurgence in oil prices indicates that traders are pricing in continued supply risk.
The yen also eased against major currencies, reflecting a broader risk-on sentiment in equities that contrasts with the defensive positioning in energy.
This cross-asset reaction underscores the complexity of the current geopolitical regime.