IRAN'S early Wednesday attack on two US bases in Iraq came as a surprise to investors, most of whom expected a covert response from Tehran.

Understandably, the revenge plot for last Friday's Pentagon-led airstrike that killed top Iranian general Qassem Soleimani sent Asian equity markets diving in early trading, but they managed to stage a recovery after Iran said it does not seek escalation or war, but will defend itself against aggression.

AxiTrader chief Asia market strategist Stephen Innes observed that equity markets in the region reversed the effects of the early knee-jerk reaction mainly because of the lack of an immediate US retaliation.