Most Asian markets drop as Mideast hopes dim

Asian markets experienced a decline on Tuesday as hopes for resolving the US-Iran conflict diminished, following the expiration of a truce deadline. In Tokyo, the Nikkei 225 closed 2.5% lower at 67,460.73 points, while Hong Kong's Hang Seng Index remained flat at 25,471.15 points, and Shanghai's Composite index gained 0.2% to 3,990.30 points.

The ongoing Middle East crisis and high oil prices, hovering around $90 a barrel, dampened investor sentiment. Long-term Treasury yields surged to levels not observed since the global financial crisis, driven by fears of persistently high inflation and increased US borrowing. Despite positive overtures from US President Donald Trump and Jared Kushner, the chances of achieving a lasting agreement with Iran seem slim.

Jared Kushner acknowledged the existence of "very positive and active conversations" between the two sides but emphasized that trust remains lacking between the United States and Iran. The Trump administration has signaled its patience in reaching a deal, while Iran's stance remains skeptical. Treasury Secretary Scott Bessent hinted at potential severe economic measures against Iran, following Trump's threats to bomb Oman if negotiations were impeded.

Oil prices continued their upward trajectory, with Brent crude surpassing $91 per barrel, bolstering long-term Treasury yields to levels not seen since before the financial crisis. Equities largely slipped after Wall Street's declines, with Tokyo's Nikkei 225 falling over two percent, and other Asian markets such as Seoul, Taipei, Sydney, and Singapore also declining.