Asian Markets Rise, Tracking Wall Street's Record-Breaking Rally

Asia-Pacific stock markets opened mostly higher on Tuesday, following a rally on Wall Street in the previous session. Market sentiment was boosted by easing tensions between the United States and Iran, which increased global investor optimism. In Japan, the Nikkei 225 index rose 1.41% in early trade, while the Topix gained 0.88%. In South Korea, the Kospi index added 1.17%, whereas the small-cap Kosdaq index fell 0.88%. Meanwhile, Australia’s benchmark S&P/ASX 200 index traded relatively flat. Market participants are also monitoring several key economic data releases from the United States due later today. On Wall Street, all three major indices closed higher on Monday. The S&P 500 rose 1.18%, while the Nasdaq Composite surged 2.07%. The Dow Jones Industrial Average jumped 306.63 points, or 0.59%, to close above the 52,000 level for the first time in history. The index’s rise was supported by a nearly 5% surge in Alphabet shares on the company’s first day of trading as a new member of the Dow Jones. Investor optimism emerged after the US and Iran agreed to halt attacks and reopen commercial shipping lanes through the Strait of Hormuz. A US official said both sides would temporarily exercise restraint and that ships could once again transit freely through the strategic waterway. On the corporate side, shares of defence technology company AeroVironment surged 19% in after-hours trading. The stock’s performance was driven by a fourth-quarter fiscal earnings report that exceeded market expectations. AeroVironment posted adjusted earnings of US$1.84 per share on revenue of US$642 million, surpassing analyst projections of US$1.46 per share in earnings and US$559 million in revenue. Evercore ISI Senior Managing Director Julian Emanuel assessed that current market sentiment is not yet fully positive, but that this condition could actually serve as a good foundation heading into earnings season. He believes large-cap technology stocks have the potential to once again become the main market driver in the second half of the year. Market participants will also be monitoring several US economic data releases scheduled for Tuesday local time, including the JOLTS job openings survey for May and the Chicago PMI manufacturing activity index.