Risk sentiment improved sharply overnight as President Trump delayed strikes against Iran and announced the resumption of new talks, triggering a steep sell-off in crude oil — Brent fell 7.05% to $83.77 and WTI dropped 5.11% to $80.34 — easing near-term inflation concerns and lifting equities broadly. The FOMC held the federal funds rate unchanged at 3.50–3.75%, while the Bank of Japan maintained its policy rate at 1.00% and — in a notable coordination with US Treasury — executed yen-buying intervention for the first time since 2011, sending USD/JPY down 1.62% to 157.58. The VIX fell 6.44% to 15.99 and the Nikkei VIX collapsed 26.16%, signalling a material reduction in near-term fear across global markets. The combination of geopolitical de-escalation, a steady Fed, and a surging Amazon earnings beat created a powerful tailwind for risk assets into the new week.
For Asia-Pacific markets opening Tuesday, the read-through is broadly constructive but nuanced. The Nikkei's 4.03% surge and the collapse in Nikkei VIX reflect the dual benefit of yen intervention providing policy clarity and the global risk-on impulse from Wall Street's near-record run; however, a stronger yen at 157.58 introduces headwinds for Japanese exporters on a sustained basis. The ASX 200 closed up just 0.10% ahead of these overnight developments, meaning the energy sector — home to major producers like Woodside and Santos — faces direct pressure from the sharp crude selloff, while technology and discretionary names with US earnings tailwinds may find support. The RBA's next decision on 11–12 August remains the key domestic policy event on the horizon, keeping rate-sensitive sectors including REITs and financials in focus as the cash rate sits at 4.35%.