Asian equities erupted in a powerful relief rally on Wednesday, April 1, as growing optimism that the month-long U.S.–Israel war against Iran may be nearing an end triggered aggressive buying across the region. South Korea’s KOSPI soared 8.44% — its biggest single-day gain in years — while Japan’s Nikkei 225 surged 5.31%, buoyed by both the ceasefire hopes and a strong Bank of Japan Tankan survey. Hong Kong’s Hang Seng rose 1.91%, and Australia’s S&P/ASX 200 gained 2.24%. The rally followed an overnight Wall Street explosion, where the S&P 500 jumped 2.91% and the Nasdaq surged 3.83% — both posting their biggest one-day gains since May 2025.
What Sparked the Rally: Trump Signals Iran War Could End in Weeks
The catalyst for Wednesday’s Asia-wide surge was a series of overnight developments suggesting the Iran conflict may be approaching a resolution. U.S. President Donald Trump said the U.S. would end its strikes on Iran and that the two sides could still strike a deal, adding that an agreement with Tehran was not a prerequisite for the war to end. Trump indicated the conflict could wrap up in two to three weeks, and was expected to give an address to the nation on Wednesday to provide an “important update” on Iran.
This followed Tuesday’s Wall Street rally, where the S&P 500 jumped 2.91% to 6,528.52, the Nasdaq rallied 3.83%, and the Dow surged 2.49% — all posting their biggest one-day gains since May 2025 — after the Wall Street Journal reported that Trump told aides he was willing to end the military campaign even if the Strait of Hormuz remained largely closed.
“Trump setting a two- to three-week horizon for ending the conflict has given the market something it desperately needed — a time frame,” said Stephen Innes, managing partner at SPI Asset Management, as quoted by SCMP. “That is enough to trigger re-engagement. Enough to tell systematic money that the left tail risk is no longer expanding at the same velocity.”
Asia Market Performance — April 1, 2026
| Index | Close | Change |
|---|---|---|
| 🇰🇷 KOSPI | 5,478.74 | +426.24 (+8.44%) |
| 🇰🇷 KOSDAQ | 1,116.18 | +63.79 (+6.06%) |
| 🇰🇷 KOSPI 200 | 813.84 | +69.27 (+9.30%) |
| 🇯🇵 Nikkei 225 | 53,773.00 | +2,709.28 (+5.31%) |
| 🇭🇰 Hang Seng | 25,261.00 | +472.86 (+1.91%) |
| 🇨🇳 Shanghai Composite | 3,948.55 | +56.69 (+1.46%) |
| 🇨🇳 CSI 300 | 4,526.07 | +76.02 (+1.71%) |
| 🇦🇺 S&P/ASX 200 | 8,671.80 | +190.00 (+2.24%) |
Sources: Yonhap, SCMP, Nikkei Asia
South Korea: KOSPI Explodes 8.44% — Biggest Rally in Years
The KOSPI’s stunning 8.44% surge to 5,478.74 was the day’s most dramatic move across global markets. The benchmark index added 426.24 points in a single session, recovering a significant portion of the losses suffered since the Iran war began on February 28. The KOSPI 200 large-cap index performed even better, rising 9.30%.
The rally was driven by several converging factors:
- Iran ceasefire optimism: Trump’s suggestion that the war could end in two to three weeks triggered massive short-covering and bargain hunting
- WGBI entry: South Korea’s government bonds officially entered the FTSE World Government Bond Index (WGBI) on April 1, a milestone expected to draw around 80 trillion won ($52 billion) in foreign inflows over the eight-month phase-in period
- Won recovery: The Korean won surged to 1,507.2 per dollar, strengthening sharply on hopes for Middle East de-escalation and the WGBI inclusion
- Record exports: South Korea’s monthly exports topped US$80 billion for the first time ever in March, demonstrating the resilience of the export-driven economy
- UAE crude supply confirmed: The ministry confirmed that crude oil supply from the UAE was en route to South Korea as agreed, easing the country’s acute energy supply concerns
The previous day, President Lee Jae-myung had urged “bold measures” to cope with the energy crisis, raising the possibility of an emergency economic decree. The government also proposed a 26.2 trillion won ($17.1 billion) supplementary budget to cushion the impact of Middle East tensions.
Sources: Yonhap (KOSPI +8%), The Korea Herald (KOSPI jumps 8%, won surges), The Korea Herald (WGBI)
Japan: Nikkei Surges 4% as Tankan Improves and Ceasefire Hopes Rise
Japan’s Nikkei 225 soared 5.31% to 53,773.00, snapping its recent losing streak and pulling back from the correction territory it had entered just days earlier. The rally was propelled by both the global risk-on sentiment from Iran de-escalation hopes and a stronger-than-expected domestic economic survey.
The Bank of Japan’s Tankan survey, released Wednesday, showed that business sentiment among large Japanese manufacturers improved for a fourth consecutive quarter in the January–March period. The better-than-expected reading helped propel Tokyo stocks higher, though the outlook remained uncertain due to Middle East unrest.
The strong Tankan data reinforced expectations that the BOJ is laying the groundwork for a rate hike at its April 27–28 meeting. Markets now price a 70% probability of an April rate increase, as the central bank has been releasing studies and policy meeting opinions signaling the need for tighter policy amid rising oil prices and the weakening yen.
The yen remained under pressure near 160 per dollar, though it strengthened slightly on the back of the broader risk-on sentiment. Japan’s top currency diplomat has warned that the government was “ready to take decisive steps” if speculative moves persist, raising the prospect of direct FX intervention. Meanwhile, the Hormuz crisis continued to drive Japan’s power futures trading to a record high, underscoring the energy-dependent economy’s vulnerability.
Sources: Nikkei Asia (Tankan), Nikkei Asia (BOJ Rate Hike), Nikkei Asia (Power Futures)
Hong Kong & China: Broad Rally as Risk Appetite Returns
Hong Kong’s Hang Seng Index rose 1.91% to 25,261.00, heading for its biggest gain in a week. The Hang Seng Tech Index gained 1.5%, while the mainland’s CSI 300 Index climbed 1.71% to 4,526.07 and the Shanghai Composite added 1.46% to 3,948.55.
The rally was broad-based, with all but three stocks on the 90-member Hang Seng Index rising, reflecting a broad recovery in sentiment. Blue-chip gains included:
- HSBC Holdings advanced 2.3% to HK$128.70
- Alibaba Group rose 2.5% to HK$122
- Tencent Holdings added 2.3% to HK$495
In a clear sign of returning risk appetite, the U.S. dollar index dropped below 100 for a second day — the key haven investors had flocked to as a hedge against the war. The yield on 10-year U.S. Treasuries dropped 2.2 basis points to 4.2948%, marking a third day of declines as inflation concerns faded slightly.
China’s relative resilience throughout the Iran-driven selloff has been notable, underpinned by its lower exposure to Middle Eastern energy. With exports surging 22% in the first two months of 2026 and the property market showing tentative signs of stabilization, Chinese equities have been better insulated than their regional peers.
Sources: SCMP (HK/China Rally)
Australia: Energy Exporters Continue to Benefit
Australia’s S&P/ASX 200 added 2.24% to 8,671.80, participating in the broad Asia-Pacific rally. Australia’s unique position as a major energy exporter has made it a relative beneficiary of the Iran crisis, with LNG and coal stocks surging throughout March.
Nikkei Asia reported that Australia’s LNG exporters see the crisis as an “opportunity,” with Woodside and Santos shares surging as industry chiefs call for capacity growth to meet Asia’s scramble for non-Middle Eastern energy alternatives. Australian coal stocks also spiked as the energy crisis broadened, while rare-earth stocks soared as China clamped down on exports.
Sources: Nikkei Asia (LNG), Nikkei Asia (Coal)
Overnight: Wall Street Posts Best Day Since May 2025
The Asia rally was set up by a powerful Tuesday session in New York. All three major U.S. indexes recorded their biggest one-day gains since May 2025:
| Index | Close | Change |
|---|---|---|
| 🇺🇸 S&P 500 | 6,528.52 | +2.91% |
| 🇺🇸 Nasdaq Composite | 21,590.63 | +3.83% |
| 🇺🇸 Dow Jones | 46,341.51 | +2.49% |
Big tech names led the charge: Nvidia surged 5.6%, Alphabet added 5.1%, and Meta Platforms jumped 6.7%. The PHLX Semiconductor Index jumped 6.24% in its strongest session in nearly a year. CoreWeave rallied 12% after securing an $8.5 billion loan to expand AI infrastructure, while Marvell Technology surged 12% after Nvidia invested $2 billion in the company.
Sources: Nikkei Asia / Reuters
Currencies & Commodities
| Asset | Level | Note |
|---|---|---|
| 🛢️ Brent Crude (prev close) | $118.35/bbl | Highest close since Jun 2022 |
| 🛢️ WTI Crude (prev close) | $101.38/bbl | −1.46% |
| 💴 USD/KRW | 1,507.2 | Won strengthens sharply |
| 💴 USD/JPY | ~160 | Near 20-month low for yen |
| 💵 DXY (Dollar Index) | <100 | 2nd day below 100 |
| 🏛️ U.S. 10Y Treasury | 4.295% | −2.2 bps (3rd day of declines) |
The Korean won was a standout performer, surging to 1,507.2 per dollar on the back of Middle East de-escalation hopes and the historic WGBI inclusion. This marks a sharp recovery from Tuesday, when the won had hit a 17-year low.
Key Developments to Watch
- Trump’s Iran address — The U.S. president was expected to give an address on Wednesday with an “important update” on the Iran conflict; markets will react swiftly to any concrete ceasefire timeline
- BOJ rate hike — The April 27–28 meeting looms large, with a 70% probability of a rate increase priced in. The strong Tankan data strengthens the case, but Middle East uncertainty complicates the picture
- South Korea WGBI inflows — With bond index inclusion now effective, the trajectory of foreign capital inflows will be closely monitored as a potential stabilizer for the won
- Good Friday (April 4) — U.S. markets will be closed, but the March non-farm payrolls report will still be released that morning, with markets reacting the following Monday
- Oil prices — Brent at $118 remains elevated despite ceasefire hopes; any reversal in diplomatic momentum could send prices and markets careening in the opposite direction
As the war enters its 33rd day, Wednesday’s explosive rally underscores just how hungry markets are for any signal that the conflict is winding down. But as Lorraine Tan, director of equity research at Morningstar, cautioned earlier this week: “Until there is more concrete evidence of a resolution, we are likely to see markets come under pressure.”
Disclaimer: This article is for informational purposes only and does not constitute investment advice. All data is sourced from publicly available reports. Market conditions are subject to rapid change — always do your own research before making investment decisions.
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