Asia Stocks Rise as Investors Balance Iran Tensions and Interest Rate Uncertainty

Asian equity markets advanced on Tuesday as investors weighed escalating tensions involving Iran against persistent uncertainty over global interest rate policy. Shares across major regional exchanges posted moderate gains, led by technology companies that benefited from renewed investor appetite for growth assets.

In Tokyo, benchmarks in Tokyo rose as semiconductor and electronics firms attracted buying interest. Hong Kong and Seoul also recorded upward movement, reflecting confidence that central banks may adopt a more measured approach in upcoming policy meetings. Analysts noted that while inflation remains above target in several economies, recent data suggests price pressures could be stabilising.

Market participants remained attentive to developments in the Middle East after warnings from Iranian and United States officials raised concerns about potential military escalation. Energy traders monitored crude oil prices closely, though the absence of immediate supply disruption limited volatility during the Asian session.

Investors are also preparing for further signals from the Federal Reserve and the European Central Bank. Policymakers in both institutions have emphasised that decisions will depend on incoming economic data, particularly inflation and labour market indicators. Expectations of prolonged elevated rates have tempered enthusiasm in bond markets, yet equity investors appear cautiously optimistic.

Technology stocks continued to underpin regional gains. Chip manufacturers and artificial intelligence related firms saw renewed inflows amid expectations of sustained global demand. Traders cited ongoing investment commitments from multinational corporations as reinforcing long term sector prospects.

Currency markets showed limited movement, with the Japanese yen and Chinese yuan trading within narrow ranges. Regional fund managers described the current environment as one of selective opportunity rather than broad based risk taking.

While geopolitical risks remain a key variable, analysts argue that corporate earnings resilience and strong liquidity conditions are supporting sentiment. The coming days are expected to bring further clarity as inflation data and central bank commentary shape the next phase of market direction.