Oil prices experienced a significant decline on Monday, while Asian stock markets mostly advanced, following comments from former President Donald Trump indicating that negotiations with Iran over the ongoing conflict were making headway. Trump stated that talks were 'proceeding in an orderly and constructive manner,' sparking optimism that a resolution may be near.
Market Movements
Japan's benchmark Nikkei 225 index surged by 3.1 percent in morning trading to reach 65,321.56. Australia's S&P/ASX 200 added 0.4 percent to 8,692.70, and the Shanghai Composite edged up 0.4 percent to 4,127.53. Trading was suspended in South Korea and Hong Kong for Buddha's birthday holidays, while US markets were closed for Memorial Day.
Oil Price Decline
Benchmark US crude fell by $4.35 to $92.25 a barrel early Monday. Brent crude, the international standard, dropped $4.16 to $99.38 a barrel. The decline was driven by expectations that a peace deal could lead to the reopening of the Strait of Hormuz, a critical waterway for global oil shipments. The strait's closure had previously disrupted crude deliveries, causing prices to spike.
Analyst Stephen Innes commented, 'Markets are rapidly transitioning from pricing geopolitical fear toward pricing a potential peace dividend as Hormuz reopening expectations pressure oil and the dollar lower.'
Currency and Bond Markets
In currency trading, the US dollar weakened to 158.80 Japanese yen from 159.16 yen, while the euro strengthened to $1.1641 from $1.1605. The yield on the 10-year Treasury note edged down to 4.56 percent on Friday from 4.57 percent late Thursday, though it remains well above its pre-war level of 3.97 percent.
Wall Street Performance
On Friday, US stocks finished their eighth straight winning week, the best such streak since 2023. The S&P 500 added 0.4 percent, approaching its all-time high set in mid-week. The Dow Jones Industrial Average rose 0.6 percent, and the Nasdaq composite gained 0.2 percent. Recent earnings reports from US companies that exceeded analysts' expectations also supported market sentiment, though lingering inflation concerns continue to push bond yields higher worldwide.
