SYDNEY — Global markets wobbled in holiday-thinned trading Tuesday as oil held a fresh risk premium ahead of U.S.–Iran nuclear talks in Geneva and investors digested Japan’s softer-than-expected growth. With major data releases and central-bank signals queued up, the weak Japanese GDP print helped temper near-term rate-hike bets for the Bank of Japan, Feb. 17, 2026.
Trading was quieter than usual across Asia as Lunar New Year holidays shut markets in China, Hong Kong, Singapore, South Korea and Taiwan, while U.S. cash markets were closed a day earlier for Presidents Day. Japan’s Nikkei fell about 0.9% and Australia’s S&P/ASX 200 eked out a small gain, according to Reuters’ market wrap.
U.S. stock-index futures leaned lower in the Asian session, with Nasdaq futures down close to 0.8% and S&P 500 futures off about 0.4%, as traders looked ahead to the Federal Reserve’s minutes and fresh U.S. growth data later in the week. Bond moves were modest, but Japanese government bond yields dipped after a weak five-year auction underscored a cautious tone.
Global markets: oil-driven risk premium takes center stage
Oil remained the main swing factor for global markets, with prices choppy into the start of the Geneva talks. Brent crude was last down about 0.5% near $68.33 a barrel after logging a solid gain in the prior session, while U.S. West Texas Intermediate was up nearly 1% around $63.51, according to Reuters.
Traders have been pricing the risk that diplomacy fails and tensions spill into energy flows. Iran conducted naval drills near the Strait of Hormuz ahead of the talks, and the waterway remains a critical choke point for crude shipments. The United States has also signaled heightened alertness in the region, adding to the sense that oil could swing sharply on headlines.
Beyond geopolitics, supply management is also in focus. OPEC+ has been weighing whether to resume output increases from April, a move some analysts say could cushion prices if the current risk premium unwinds. In its February outlook, the International Energy Agency flagged January’s price surge and ongoing sensitivity to Persian Gulf developments, even as it expects global supply to rise in 2026.
The U.S.–Iran nuclear file has repeatedly rippled through global markets over the past decade, shaping sanctions, exports and the perceived risk around Middle East supply. When the original 2015 agreement was reached, U.S. officials said Iran could ultimately gain access to more than $100 billion once the deal was implemented, Reuters reported at the time. The United States later pulled out in 2018 and reimposed sweeping sanctions, Axios reported, a shift that reshaped trade flows and kept crude traders attuned to every negotiating turn.
Even before this week’s talks, oil’s sensitivity to negotiations was evident in earlier cycles: in 2022, prices dipped on hints of progress because a deal could have brought sanctioned barrels back to market, as Reuters noted during that round of talks. The same dynamic — the push and pull between potential additional supply and the risk of confrontation — is back in play now, leaving global markets wary of sudden gaps or gluts.
Japan’s weak GDP dims near-term BOJ hike bets
Japan’s economy barely returned to growth in the final quarter of 2025, expanding at a 0.1% pace from the prior quarter and an annualized 0.2%, according to a Cabinet Office statement accompanying the GDP release. The government said domestic demand rose overall, while net exports were broadly flat, according to a provisional English translation posted by the Cabinet Office.
The data helped knock the yen lower at the margin and encouraged traders to shave back expectations for near-term BOJ tightening. The central bank raised rates to a 30-year high of 0.75% in January, and policymakers have been balancing still-sticky inflation against signs that growth remains fragile.
Japan’s rate path has been one of the more important macro crosscurrents for global markets because it affects Japanese bond yields, the yen and the incentives for investors to park money abroad. The BOJ only began climbing out of its ultra-easy era recently, after it ended negative rates in 2024, as The Associated Press reported. This week’s GDP disappointment reinforces the risk that normalization proceeds more slowly than hawkish voices would like.
For now, the next key test is the BOJ’s March meeting. The central bank’s own calendar lists its next Monetary Policy Meeting dates as March 18–19, according to the Bank of Japan’s release schedule, and investors will be watching whether officials keep the door open to another hike in the spring or signal patience until midyear.
What to watch in the pivotal week ahead
With global markets already jumpy, this week’s event list could amplify moves. Investors are tracking U.S. Fed minutes and U.S. growth data for clues on when rate cuts might resume, while several inflation updates — including readings in Japan — will feed into the debate over how quickly central banks can shift from fighting inflation to supporting growth.
Until clearer direction emerges, the market mood looks set to be dictated by two headline-driven variables: whether the U.S.–Iran talks reduce the risk premium embedded in oil, and whether Japan’s soft growth forces the Bank of Japan to move more cautiously than investors expected just weeks ago. Either way, global markets may stay unsettled until diplomacy and data deliver a clearer path forward.
