Asian stocks rise on ceasefire hopes after S&P 500's $550B rally

Asian stocks broadly rose Tuesday morning as hopes for a new US-Iran ceasefire bolstered investor appetite for risky assets, extending a rally that lifted US equities by roughly $550 billion in the prior session.

The S&P 500 rose 0.63% and the Nasdaq climbed 1.02% on Monday, market data shows, after Reuters reported that mediators proposed a 10-day truce aimed at reviving the Islamabad Memorandum peace deal that Pakistan and Qatar brokered in June. The agreement, signed remotely by President Donald Trump and Iranian President Masoud Pezeshkian on June 17, collapsed in July when strikes resumed.

Oil moved in the opposite direction. West Texas Intermediate traded near $82.65 a barrel and Brent slipped to about $88.46, TradingView data shows, after topping $90 on Sunday following reports of escalating conflict. The pullback in crude prices provided an additional tailwind for Asian equities, particularly for net oil importers in the region.

Ceasefire Skepticism and Regional Risks

The rally faces headwinds from Tehran. Parliament Speaker Mohammad Bagher Ghalibaf said the US keeps sending military equipment to the region while claiming it wants peace. "We've reached the stage of mastery in recognizing these American games, and on that basis, we've prepared ourselves," Ghalibaf said.

Yemen's Houthis added to the uncertainty by declaring a maritime embargo on Saudi shipping through the Bab el-Mandeb Strait. Military spokesman Yahya Saree called it an "eye for an eye" response to Riyadh's siege of Houthi ports. The threat targets a critical chokepoint: Riyadh now sends over 70% of its crude exports — roughly 4 million barrels per day — through the Red Sea port of Yanbu, Kpler data shows.

Rotation Into Lagging Markets

The rally in Asian equities tracked Wall Street's gains, with some investors rotating into lagging markets. Indonesia's Jakarta Composite Index has risen more than 10% so far in July, even as it remains down 28% year-to-date, making it Asia's worst-performing major market this year. The rupiah has fallen nearly 8% in 2026, pinned at record lows amid concerns over fiscal discipline under President Prabowo Subianto's welfare policies.

"We've been taking some profit in South Korea and buying Indonesia," said David Chao, Asia-Pacific global market strategist at Invesco. "Indonesia is still probably the most under-looked macro growth story play."

The US Strategic Petroleum Reserve sits at its lowest level since 1983 after a record 400 million-barrel release in March, limiting the government's ability to cap gasoline prices if oil spikes again. Traders already price high odds of $4 gas by the end of July, a climb of nearly 25% from current levels.

For now, the gains rest on a proposal, not a pause. Real progress on the ceasefire will determine whether the rally has staying power.

This article is for informational purposes only and does not constitute investment advice.