Asian Markets Rise Despite Fresh US-Iran Ceasefire Concerns

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White House/Via WikiCommons

US President Donald Trump

By Richard Fargose

May 12, 2026 at 1:55 AM IST

GLOBAL MOOD: Cautiously Risk-On
Drivers: US-Iran Ceasefire Uncertainty, Oil Surge

Asia-Pacific markets reflected a cautious risk-on mood on Tuesday, with investors largely brushing aside fresh concerns over the fragile US-Iran ceasefire and focusing instead on resilient corporate earnings and expectations of sustained global growth. Regional equities moved higher, led by South Korea’s Kospi, which extended gains after hitting record highs, while Japanese and Hong Kong markets also advanced.

Investor sentiment remained supported by strong earnings momentum in the US and optimism that continued spending on artificial intelligence and technology infrastructure, particularly across Asia, will underpin corporate profit growth. This helped global equities recover losses linked to the Iran conflict and push toward fresh highs.

However, geopolitical risks continued to cap broader optimism after US President Donald Trump warned that the ceasefire with Iran was on “massive life support” and rejected Tehran’s latest proposal. Oil prices remained elevated, with Brent and WTI holding firm near key levels, adding to inflation concerns and reducing expectations for Federal Reserve rate cuts this year. Rising Treasury yields also reflected growing caution over the inflation outlook and energy-driven price pressures.

THE BIG STORY
US President Donald Trump warned that the ceasefire with Iran was “on life support” after rejecting Tehran’s latest response to Washington’s peace proposal, highlighting widening differences between the two sides. Iran demanded a broader end to hostilities across the region, compensation for war-related damage, lifting of the US naval blockade and restoration of oil exports, while also reaffirming control over the Strait of Hormuz.

The breakdown in negotiations raised concerns that the temporary ceasefire established in April could deteriorate further, especially as the Strait of Hormuz remained largely closed. Oil markets reacted sharply, with Brent crude rising above $104 per barrel amid fears of prolonged disruption to one of the world’s most critical energy corridors.

Iranian officials defended their position, while military leaders signalled readiness to respond to any renewed aggression, reinforcing concerns that tensions in West Asia could escalate again despite ongoing diplomatic contacts.

Separately, attention also shifted toward the upcoming US–China summit, where senior American business leaders including executives from Apple, Boeing, Qualcomm and Visa were expected to participate alongside Trump. The meeting was expected to focus on trade, investment and strategic cooperation, with potential announcements involving aircraft, agriculture and energy purchases by China.

Data Spotlight
US existing home sales edged up 0.2% month-on-month to an annualised pace of 4.02 million units in April 2026, slightly below market expectations but showing signs of stabilisation after hitting a seven-month low in the previous month. Higher mortgage rates, driven by rising Treasury yields amid elevated energy prices and geopolitical tensions, continued to weigh on housing demand.

Regional performance remained mixed, with sales declining sharply in the West while the Midwest recorded moderate gains. Housing inventory increased 5.8% to 1.47 million units, equivalent to 4.4 months of supply, indicating gradual improvement in market availability.

According to the National Association of Realtors, improving affordability conditions provided some support to activity despite weak consumer confidence and broader macroeconomic uncertainty. Lower mortgage rates compared to last year and wage growth outpacing home price increases also helped stabilise demand.

Takeaway:
The US housing market showed early signs of resilience, although elevated borrowing costs and softer consumer sentiment continued to limit a stronger recovery.

WHAT HAPPENED OVERNIGHT

US stocks edged higher as ai optimism offset oil-driven inflation concerns
- S&P 500 and Nasdaq closed at fresh record highs, while Dow Jones also ended higher.
- Investors continued to favour AI-linked stocks despite rising geopolitical tensions.
- Donald Trump rejecting Iran’s latest proposal lifted oil prices and renewed inflation concerns.
- Energy stocks led sectoral gains as crude prices surged on ceasefire uncertainty.
- Communication services underperformed amid fading momentum in parts of the tech rally.
- Intel gained 3.6% following reports of a potential chipmaking deal with Apple.
- Qualcomm surged 8.4% to a record high as semiconductor optimism remained strong.
- Investors also looked ahead to upcoming earnings from Cisco, Applied Materials, Nvidia and Walmart.

US Treasury yields rose as oil rebound revived inflation fears
- The 10-year US Treasury yield climbed around 5 bps to 4.4%.
- Rising oil prices reignited inflation concerns amid worsening US–Iran tensions.
- Donald Trump rejected Iran’s latest response and warned the ceasefire was on “life support”.
- Markets grew concerned about prolonged instability in West Asia and continued Hormuz disruptions.
- Investors awaited upcoming US inflation data for further guidance on Federal Reserve policy.
- Markets continued to expect the Fed to keep rates unchanged this year, though rate hike expectations for 2027 remained elevated.

US Dollar edged higher as ceasefire concerns supported safe-haven demand
- The US dollar index rose marginally to 97.92 after briefly touching 98.16.
- Donald Trump rejected Iran’s latest response to the US peace proposal.
- Trump warned the ceasefire was “on life support,” reviving fears of renewed escalation.
- Rising oil prices and prolonged conflict concerns supported defensive positioning in the dollar.
- Euro slipped slightly against the greenback as investors monitored geopolitical risks.
- Markets remained focused on disruptions to energy flows through the Strait of Hormuz.

Oil jumped as ceasefire fears reignited supply disruption concerns
- Brent crude rose 2.9% to settle at $104.21 per barrel, while WTI gained 2.8% to $98.07.
- Prices climbed after Donald Trump warned the ceasefire with Iran was “on life support”.
- Markets feared renewed escalation could prolong disruptions in the Strait of Hormuz.
- Brent briefly touched nearly $106, while WTI moved above $100 during the session.
- Continued uncertainty over Gulf shipping routes kept supply concerns elevated.
- Energy markets remained highly sensitive to geopolitical developments across West Asia.

Day’s Ledger*

Economic Data

Germany April CPI Data
Germany May ZEW Economic Sentiment Index
India April CPI Data
US weekly ADP Employment Data
US April CPI Data

Corporate Actions

Earnings: Berger Paints (I), Bharat Bijlee, Bharat Petroleum Corporation, Dr. Reddy's Laboratories, INOX India, Kalpataru, Kamat Hotels (I), Pfizer, Religare Enterprises, Subex, Tata Power Company, Texmaco Rail & Engineering, Thomas Cook (India), and Torrent Power
Onward Technologies board to consider share buyback
Indus Infra Trust board to consider fund raising
State Bank of India board to consider fund raising

Policy

BoE Deputy Governor Woods Speaks
US FOMC Member Williams Speaks

Tickers to Watch

ADANI PORTS AND SPECIAL ECONOMIC ZONE reported that Pranav Choudhary resigned as CEO–Ports, effective May 31.
AFCONS INFRASTRUCTURE selected as L1 bidder for railway track reconstruction and second-track railway line project in Europe worth ₹75.44 billion.
BHARAT FORGE signed long-term contract with Embraer for manufacturing and supply of critical landing gear forgings.
BILLIONBRAINS GARAGE VENTURES (GROWW) informed that Peak XV Partners, Y Combinator and Ribbit Capital launched a block deal with a base size of around $500 million to pare stake in Groww.
CANARA BANK raised MCLR by 5 basis points across tenures effective May 12.
CARTRADE TECH said it has delivered over 50% YoY EBITDA growth for 12 consecutive quarters.
HFCL secured export orders worth ₹1.84 billion for supply of optical fiber cables from international customers.
HG INFRA ENGINEERING received LoA worth ₹39.31 billion from Welspun Enterprises for six-lane highway corridor project in Maharashtra.
INDIAN HOTELS COMPANY Jan-Mar consolidated profit rises 14.8% YoY to ₹6.00 billion versus ₹5.22 billion.
JSW ENERGY Jan-Mar consolidated profit declines 9% YoY to ₹3.72 billion versus ₹4.08 billion.
LTM launched AI-powered LTM Business Orchestration Platform and LTM BlueVerse marketplace for SAP-focused enterprise operations.
MUNJAL AUTO INDUSTRIES received work order from Honda Motorcycle & Scooter India for sheet metal stamping and welding parts supply.
NHPC’s stake in Chenab Valley Power Projects diluted to 50.86% from 58.16% after JKSPDCL stake increase.
PREMIER ENERGIES along with Syrma SGS Technology, terminated discussions for proposed acquisition of K-Solare Energy.
UNITED SPIRITS amended RCB share sale agreement; overall deal value unchanged at ₹166.60 billion with new investors joining consortium.
VOLTAS won Qatar appeal case; court ordered ₹4.25 billion payment, ₹1.04 billion compensation and return of ₹4.33 billion bank guarantees.
WINDSOR MACHINES signed MoU with Allerindia Developers for proposed sale of industrial plots in Thane; to receive ₹1.62 billion in tranches.

Must Read

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Geopolitical Volatility Demands a More Economically Disciplined India

As geopolitical volatility reshapes energy markets, inflation dynamics and global trade, India’s economic resilience can no longer be viewed only through the lens of GDP growth or fiscal metrics. The emerging global order is forcing governments to think simultaneously about energy security, external-sector stability, inflation management and strategic consumption.

Srinath Sridharan argues that Prime Minister Narendra Modi’s recent advisory on fuel conservation, discretionary imports and economic prudence reflects a deeper recognition that geopolitics and domestic economic management are now tightly intertwined.

The larger question is whether India’s policy framework, institutions and public behaviour are prepared for a world defined less by frictionless globalisation and more by fragmentation, volatility and strategic competition.

(*Compiled from various media sources)