Asian equities are poised for a mixed-to-positive open on Tuesday as a sharp drop in Wall Street volatility and de-escalation signals in the Iran-Israel conflict offset slightly softer US futures overnight.
Wall Street ended Monday's session mixed, with the S&P 500 closing at 7,405.73, up 21.99 points or 0.30 per cent, while the Nasdaq Composite gained 220.23 points or 0.86 per cent to 25,929.66 on a semiconductor-led rebound. The Dow Jones Industrial Average slipped 80.77 points or 0.16 per cent to 50,786.01, weighed by defensive rotation.
Monday's session marked a partial recovery from the previous week's steep declines, during which the Nasdaq recorded its worst weekly performance in more than a year as a semiconductor sell-off wiped over US$1 trillion from global equity markets.
Overnight futures point to a softer tone heading into the Asian session. S&P 500 futures traded at 7,397, down 0.26 per cent, while Nasdaq 100 futures dipped 0.34 per cent to 29,354 and Dow futures fell 0.23 per cent to 50,737. The declines remain modest, suggesting limited downside pressure rather than renewed selling.
The Cboe Volatility Index, or VIX, dropped sharply by 12 per cent to 18.92 from 21.51, reflecting a significant easing in investor anxiety. The decline was driven by reports that Iran had ceased strikes on Israel and by growing expectations of diplomatic engagement, including US President Donald Trump signalling potential sanctions relief.
In currencies, the US Dollar Index held steady at 100.03, while the ringgit remained flat against the greenback at 4.07. The yen traded at 160.17 per dollar and the Chinese yuan at 6.78, both largely unchanged. The 10-year US Treasury yield edged up to 4.55 per cent.
Gold retreated 0.49 per cent to US$4,342 per ounce as safe-haven demand eased on Middle East de-escalation hopes. Brent crude held near US$94.19 per barrel and WTI at US$91.07, both marginally lower but remaining elevated due to ongoing supply concerns linked to the Iran conflict.
Among major US movers, Tesla surged 4.59 per cent to US$408.95, while NVIDIA rose 1.73 per cent to US$208.64 as chipmakers recovered from the prior week's slide. Apple fell 1.89 per cent to US$301.54 after the market judged its WWDC keynote - which introduced a revamped AI-powered Siri and expanded Apple Intelligence features - as underwhelming relative to expectations.
Across Asia on Monday, the recovery was uneven. Japan's Nikkei 225 gained 1.10 per cent and South Korea's KOSPI surged 4.11 per cent in a sharp rebound from recent losses. However, the Hang Seng fell 1.22 per cent, Singapore's Straits Times Index declined 1.71 per cent, and Malaysia's FBM KLCI slipped 0.82 per cent to 1,679.52.
Key catalysts for Tuesday's session include existing home sales data from the United States, further developments in Iran-Israel diplomacy, and post-WWDC sentiment around Apple and the broader AI hardware chain. Semiconductor names may see continued recovery if Monday's rebound extends, while energy-linked stocks will remain sensitive to oil price movements.
Bloomberg sees Asian stocks set to rebound on Iran de-escalation and AI optimism. With the VIX below the 20 threshold and oil stabilising, risk appetite is tentatively recovering. However, elevated geopolitical uncertainty and oil above US$90 per barrel continue to cap upside conviction. Tuesday's session may see cautious buying in quality names, particularly in technology and export-oriented sectors, while defensive positions in gold and energy may see light profit-taking.
