Signals of de-escalation in Middle East tensions have spurred a rebound in risk assets, with Asian equities following gains on Wall Street, although market divisions persist.

On Tuesday, stock markets across the Asia-Pacific region opened higher across the board, with the MSCI Asia Pacific Index rising by 1.5%. Markets in Japan, South Korea, and Australia all recorded gains.

According to reports, the U.S. President stated on the 23rd that he has ordered a five-day suspension of all military strikes against Iranian power plants and energy infrastructure, provided that ongoing meetings and discussions yield positive results. However, reports also indicate that the Speaker of Iran's Parliament has denied any dialogue with the United States in a social media post.

For Wall Street, the accuracy of the President's statement may be less important. The strong market rebound is not primarily due to investors blindly believing the "ceasefire" rhetoric, but rather because they view it as an assurance that the President's strong aversion to poor market performance will ultimately prevent more extreme military actions.

The conciliatory tone from the U.S. administration has reversed market pessimism, with U.S. stock indices closing more than 1% higher overnight. On Tuesday, Asia-Pacific markets followed Wall Street's upward trend, with the MSCI Asia Pacific Index opening 1.5% higher and South Korea's benchmark index opening over 4% higher.

Futures for Europe's Euro Stoxx 50 Index rose 1.2%, while Australia's S&P/ASX 200 Index gained 0.9%. Japan's Nikkei 225 Index opened higher and continued to climb, expanding its gains to 2.2%.

Rajeev de Mello, Global Macro Portfolio Manager at Gama Asset Management, commented:

The U.S. stance has provided temporary support for risk sentiment. The sharp decline in energy prices is beneficial for global risk assets. The sense of panic felt by investors early Monday has quickly reversed.

Brent crude oil rebounded by about 1% at Tuesday's opening, trading near $101 per barrel. WTI crude futures extended intraday gains to 2.2%. Yesterday, oil prices had plummeted by over 14%.

The situation in the Strait of Hormuz remains challenging, with only a very limited number of vessels passing through this critical waterway. Brock Weimer of Edward Jones noted:

Although the shift in rhetoric is an encouraging development, we believe the clearest indicator of meaningful de-escalation will be whether oil shipments resume through the Strait of Hormuz.

In other asset classes, industrial metal silver extended its overnight gains early Tuesday, approaching $70, before retreating slightly.

Spot gold fell more than 1% to $4,347 per ounce.