I've checked again this morning -- If I select the email in the new outlook client and navigate to another message, with Settings -> Email -> Message handling -> Mark as read changed to "Mark displayed items as read when the selection changes", then the message is marked as read appropriately on the servers. Again, I've tested this with a Gmail server and a standard IMAP server.
I have Microsoft Outlook Version 1.2023.1018.300 (Production).
And Client Version is 20231020006.20 .
You can check you version in Settings -> General -> About Outlook,
The only caveat is I did change other settings at the time (namely "Show email grouped by conversation" and "Sort Messages into Fcoused and Other" in Settings->Email->Layout (for all my email accounts). And in Email->Message handling, I have "Always keep items unread unless I explicitly mark them as read" selected too). So you may wish to change some of those settings as well if it isn't the setting I mentioned earlier.