Global Market Today: Asian stocks edge higher in thin holiday trading

Crude oil rose, with traders pricing in heightened geopolitical risk after Iran conducted naval exercises near a critical shipping corridor before talks with the US resume later Tuesday.

Oil advanced from Friday’s close, with West Texas Intermediate trading near $64 a barrel, with no settlement on Monday because of a US holiday. Brent rose more than 1% on Monday to close below $69. President Donald Trump said he will be indirectly involved in the talks. Iran wants to make a deal, he said.

Asian stocks posted a modest gain on Tuesday as holiday-thinned trading kept volumes light, with investors looking ahead to a fresh batch of economic data later this week for direction.

Mainland China and Hong Kong are shut for Lunar New Year holidays and US markets will return Tuesday after observing the Presidents’ Day holiday on Monday. The yen fluctuated.

The US rate path remains in focus following the slower-than-expected inflation print on Friday as traders fully priced a Fed cut in July and the strong chance of a move in June. Investors are also paying attention to the shifts in sentiment around artificial intelligence, which may reverberate far beyond the technology sector with the emergence of the so-called AI scare trade.

“The backdrop for equities is positive post CPI,” said Andrea Gabellone, head of global equities at KBC Securities. At the same time, there could be “more dispersion ahead as sentiment around key AI-exposed sectors is still very critical,” he added.In the US on Tuesday, Fed Governor Michael Barr will speak on the labor market and AI, while San Francisco Fed President Mary Daly speaks on AI and the economy. Traders will also be watching for ADP private payrolls numbers on Tuesday and the minutes from the Fed’s January meeting on Wednesday for a fresh read on the economy.Cash trading in Treasuries resumed Tuesday after bonds rallied on Friday in reaction to the benign US inflation data.

Treasury two-year yields were little changed after closing at the lowest level since 2022 on Friday. That came as traders priced in higher chances the Fed will slash rates more than twice this year. Yields on the benchmark 10-year stood at 4.04%.

In Japan, the central bank governor said Prime Minister Sanae Takaichi made no specific requests during a regular meeting to discuss the economy and swap general ideas.

Investors and economists are trying to gauge whether an emboldened Takaichi will try to slow down the central bank’s path of interest hikes to protect economic growth or if she will instead encourage the BOJ to act to help support the yen.