Asian markets rebound amid geopolitics and stimulus. Tokyo and Hong Kong lead gains

Asian markets rebound after recent turbulence

Major Asian stock markets closed the session of March 25, 2026 in positive territory, showing signs of recovery after a period marked by strong volatility and widespread selling. The rebound, albeit moderate, reflects a combination of technical and fundamental factors that have partially restored investor confidence, despite an environment that remains fragile and uncertain.

Leading the upward movement was the Hong Kong market, followed by Tokyo and Shanghai, while the South Korean market also posted a positive performance. Overall sentiment was supported by a temporary easing of geopolitical tensions and expectations of economic intervention, particularly from China.

In detail, the main indices closed the day as follows:

1. Nikkei 225 (Tokyo): 58,850.27 points (+0.16%)
2. Hang Seng (Hong Kong): 26,630.54 points (+0.95%)
3. Shanghai Composite (China): 4,162.88 points (+0.39%)
4. Kospi (South Korea): higher (positive performance according to market sources)

The recovery in Asian equities fits into a broader stabilization phase following recent corrections, which had been mainly triggered by rising global risk aversion. Investors took advantage of lower price levels to gradually re-enter the market, fueling a technical rebound that affected several sectors, including financials and industrials.

Despite the positive signal, market participants remain cautious, aware that the underlying drivers of recent tensions have not yet been resolved and could quickly resurface.

Geopolitics and oil: the Middle East remains a key factor

One of the main drivers of the markets in recent weeks continues to be geopolitical tensions in the Middle East, particularly involving Iran. The Asian region, heavily dependent on energy imports, is significantly affected by fluctuations in oil prices, which in turn are influenced by instability in the region.

The recent rise in energy prices has fueled global inflation concerns, prompting investors to reduce exposure to riskier assets. This contributed to the sell-off that hit Asian markets in previous sessions, with more pronounced effects on sectors most sensitive to energy costs.

In the March 25 session, however, a partial easing of pressure was observed, helping markets to rebound. This does not represent a structural shift, but rather a pause in what remains a highly uncertain environment. Market participants continue to closely monitor geopolitical developments, aware that any escalation could quickly reignite volatility.

The link between oil and financial markets therefore remains strong: a further rise in energy prices could translate into more persistent inflationary pressures, with direct consequences for monetary policy and global economic growth.

China’s economic policy: stimulus supports markets

A key element supporting improved sentiment in the region is the direction of China’s economic policy. Beijing recently outlined a GDP growth target of between 4.5% and 5%, a level lower than historical standards but consistent with a phase of structural slowdown.

To support the economy, Chinese authorities have announced a series of measures, including increased public spending, incentives for domestic consumption, and targeted investments in strategic sectors such as technology and advanced industry. A rise in military spending is also expected, reflecting the ongoing international tensions.

These initiatives have helped support Chinese equities and, more broadly, improve sentiment across Asian markets. Investors view fiscal stimulus and support policies as potential stabilizing factors in a complex global economic environment.

However, several challenges remain, including weak domestic demand and ongoing difficulties in the real estate sector, which continue to weigh on growth. China’s recovery path therefore appears gradual and not without obstacles, but the measures adopted signal a clear willingness to support economic activity.

US rates, capital flows and market outlook

In addition to geopolitical factors and domestic dynamics in China, Asian markets remain heavily influenced by US interest rate trends. Rising Treasury yields have had mixed effects across the region, supporting in particular the Japanese banking sector and helping to sustain the Tokyo market.

At the same time, expectations of a restrictive monetary policy by the Federal Reserve continue to put pressure on risk assets. Higher US rates tend to strengthen the dollar and reduce the attractiveness of emerging and Asian markets, triggering capital outflows.

In recent days, signs of capital outflows from Asian assets have emerged, accompanied by selling in the technology sector, particularly in semiconductor-related stocks. However, the March 25 session showed a partial reversal, with selective buying returning to the market.

Looking ahead, the outlook for Asian markets remains closely tied to the evolution of three key variables:

1. geopolitical developments in the Middle East
2. Federal Reserve monetary policy decisions
3. effectiveness of Chinese economic stimulus

In this context, the rebound recorded during today’s session represents an encouraging signal, but not enough to dispel uncertainty. Investors continue to act cautiously, favoring defensive strategies and maintaining a strong focus on global risks.

Andrea Pelucchi