On a bustling day in Tokyo, a pedestrian made their way past monitors displaying the Nikkei 225 Stock Average outside a prominent securities firm. This scene unfolded on May 7, 2026, at a time when economic and geopolitical tensions were palpable in the Asia-Pacific region.
Investors encountered mixed outcomes in the Asia-Pacific markets on Tuesday as they navigated the uncertainty surrounding the tenuous U.S.-Iran ceasefire. President Donald Trump had raised alarms about the ceasefire’s viability, describing the situation as “massive life support,” further complicating investor sentiment.
In a speech on Monday, Trump expressed skepticism about the ceasefire’s future, highlighting an unsatisfactory response from Tehran to Washington’s peace proposal. “I would say the ceasefire is on massive life support,” he remarked, likening it to a dire medical prognosis with only “a 1% chance of living.”
Amid this backdrop, Japan’s Nikkei 225 showed resilience, inching up by 0.19%, while the Topix index increased by 0.27%. However, South Korea’s Kospi, which had achieved a new high on Monday, reversed its gains, falling over 3%. Meanwhile, the smaller Kosdaq index slumped by more than 4%. In contrast, Australia’s S&P/ASX 200 experienced a decline, losing 0.82%, as investors weighed the implications of global uncertainties.
“I would say the ceasefire is on massive life support, where the doctor walks in and says, ‘Sir, your loved one has approximately a 1% chance of living,’” he said.
Japan’s Nikkei 225 added 0.19%, while the Topix rose 0.27%. South Korea’s Kospi gave up earlier gains to fall over 3% after notching a fresh record high on Monday. The small-cap Kosdaq fell over 4%. In Australia, the S&P/ASX 200 lost 0.82%.
Yields of Japan’s 10-year government bond hit their highest point since 1997, rising to a high of 2.545% after minutes from the Bank of Japan revealed that some board members said that the BOJ should raise rates soon
Hong Kong Hang Seng index rose 0.47% while the CSI 300 opened flat.
Despite mounting geopolitical tensions, higher oil prices and lingering inflation concerns, global equities have continued to push higher, underscoring what GammaRoad Capital Partners’ CIO Jordan Rizzuto describes as a “show me” market, one in which investors are increasingly unwilling to react to risks unless they materially disrupt economic or corporate fundamentals.
After weathering the pandemic, surging inflation, aggressive rate hikes and tariff fears in recent years, investors have become conditioned to buy market weakness rather than retreat from it, he wrote in a note Tuesday.
Rizzuto added that structural factors are also reinforcing the rally, including retail flows into leveraged exchange-traded funds and call options. This has prompted dealers to buy underlying equities as hedges, leading to the rapid expansion of buffer funds and hedged equity strategies that provide additional downside protection.
In the U.S., S&P 500 futures were marginally higher, and Nasdaq 100 futures added 0.1%. Futures tied to the Dow Jones Industrial Average added 24 points, or less than 0.1%.
Overnight in the U.S., the S&P 500 rose, bolstered by key tech stocks even as oil prices rose after Trump rejected Iran’s latest proposal to end the war.
The broad market index gained 0.19% and closed at 7,412.84, while the Nasdaq Composite inched up 0.1% to end at 26,274.13. Both indexes hit fresh all-time intraday highs during the session, and they closed at records. The Dow Jones Industrial Average advanced 95.31 points, or 0.19%, to 49,704.47.
— CNBC’s Lim Hui Jie and Lisa Kailai Han contributed to this report.
