Asian Markets Advance Cautiously as BOJ Raises Rates and Iran Deal Optimism Fades

Asian stock markets posted modest gains on Tuesday as investors balanced optimism over a preliminary U.S.-Iran peace agreement with the Bank of Japan’s decision to raise interest rates to their highest level in more than three decades.

Japan’s Nikkei 225 climbed 0.6%, briefly surpassing the 70,000 mark for the first time after the Bank of Japan voted 7-1 to increase its benchmark rate to 1%, a level last seen in 1995. The Japanese yen remained largely unchanged against the U.S. dollar, while Australia’s dollar slipped after the Reserve Bank of Australia left interest rates unchanged.

Across the region, broader Asian equities edged higher, supported by gains in South Korea, though weaker economic data from China weighed on Hong Kong markets. Investors also adopted a more cautious stance toward developments in the Middle East as initial enthusiasm surrounding the U.S.-Iran agreement began to cool.

Oil prices continued to decline, with Brent crude falling to a three-month low amid uncertainty over how quickly shipping activity can normalize through the Strait of Hormuz. Market analysts noted that while the agreement reduced immediate geopolitical risks, major issues—including Iran’s nuclear program and regional security concerns—remain unresolved.

On Wall Street, optimism over the diplomatic breakthrough fueled a strong rally, pushing major U.S. indexes higher and lifting investor sentiment globally. Attention now turns to comments from Bank of Japan officials for further clues on the future direction of monetary policy.