On March 5, 2026, Asian markets staged a clear relief rally. Risk appetite showed signs of returning after the prior session’s shock, while U.S. Treasuries sold off (yields rose), a classic signal that investors were rotating cautiously back into risk assets. South Korea’s KOSPI stole the spotlight with a powerful double-digit surge, helping lift broader regional benchmarks.

But make no mistake: this wasn’t a “problem solved” moment. It looked more like a temporary sentiment shift driven by hopes of de-escalation, not a confirmed turning point.

A rebound that looks exactly like a “war market” session

Across the region, equities climbed strongly:

• MSCI Asia-Pacific ex-Japan jumped

• KOSPI surged roughly 10%+

• Japan’s Nikkei gained close to 3%

At the same time, U.S. 10-year yields moved up to around 4.109%, reflecting a tentative “risk-on” mood as investors trimmed safe-haven bond exposure.

This kind of rebound is common after panic-driven selling especially when a market senses even a small chance of an “off-ramp” from escalation.

Why did sentiment flip?

The rally was fueled by renewed hope that the U.S. and Iran may seek ways to cool tensions, plus some reassurance around protections for shipping flows. However, political signals in Washington still pointed to a tougher stance, reinforcing that the conflict may not end quickly.

In short: stocks bounced on hope, while the broader market stayed anchored to geopolitical risk.

Oil and gold still climbed: energy risk hasn’t gone away

Interestingly, even as equities rose, oil and gold traded higher—an “out-of-sync” move that often happens when war risk is unresolved.

• WTI around $76.91/barrel (+~3%)

• Brent around $83.43/barrel (+~2.5%)

• Spot gold around $5,178/oz (+~0.8%)

That mix tells a clear story: equities may be breathing again, but commodities are still pricing supply disruption and the possibility that inflation pressure returns via energy.

Why Asia is the most sensitive to a Middle East energy shock

Asia remains heavily dependent on energy imports from the Middle East. That’s why any disruption risk especially around key shipping routes hits Asian assets quickly through oil prices, freight costs, insurance, and inflation expectations.

The market’s biggest fear is a disruption near the Strait of Hormuz, one of the world’s most critical oil transit chokepoints. Even a rising probability of constraints can push energy prices higher and amplify volatility across global assets.

What to watch over the next few sessions

If you’re tracking markets or producing investor content, these are the key “checkpoints” right now:

1. War headlines (hour by hour): sentiment can reverse quickly

2. Oil prices & shipping flow conditions: energy is the inflation trigger

3. U.S. Treasury yields: fast yield spikes pressure growth/tech valuations

4. KOSPI & semiconductors: often the first place global risk appetite shows up

5. China policy messaging: growth targets and consumption support shape regional mood

Source: Reuters