Asia holidays as US, Iran work to avert conflict

A look at the day ahead in European and global markets

By Rae Wee, Correspondent

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Asian markets were pretty sedate on Thursday with parts of the region still out for the Lunar New Year holiday, though investors remained on edge over whether tension between the U.S. and Iran could be the next geopolitical shoe to drop.

The two nations have long been at loggerheads over Iranian nuclear activity, with the U.S. accusing Iran of militaristic ambition and Iran insisting its goals are peaceful. While the pair made progress during talks in Geneva this week, distance remained on some issues, the White House said on Wednesday.

People walk past an anti-US mural on a street in Tehran, Iran, February 5, 2026. Majid Asgaripour/WANA (West Asia News Agency) via REUTERS

Iran is set to submit a proposal on how to resolve their disagreements, a senior U.S. official told Reuters.

Increased U.S. military activity in the oil-producing region has nonetheless left market participants nervous. The balance of risk tilts to a U.S. strike after market close Friday, with any attack likely to last weeks rather than being over by Monday open, said Rabobank Senior Global Strategist Michael Every.

That has left oil prices continuing a surge from the previous session amid concern over potential supply disruption. Brent crude futures were up 0.36% at $70.60 a barrel on Thursday while U.S. crude rose 0.43% to $65.47.

Graphics are produced by Reuters.

Elsewhere, stock prices were lifted by renewed optimism over artificial intelligence after Nvidia this week announced a multi-year deal to sell Meta Platforms millions of current and future AI chips.

Analysts said the announcement lent a much-needed reprieve to technology stocks which had lost ground this month on concern about valuations being too high and about how long it would take for AI investment to boost revenue growth.

Over in the currency market, the U.S. dollar looked perky as minutes from the U.S. Federal Reserve's latest board meeting showed no rush to cut the central bank's policy interest rate, with several members open to hikes if inflation proved sticky.

The minutes highlighted divisions at the bank, particularly as policymakers grapple with the impact of AI on the world's largest economy, with some expecting a productivity boom to ease inflation, while others said heavy AI investment could pose financial risk.

Graphics are produced by Reuters.