Asian shares mostly gained on Monday, while oil prices experienced a sharp decline following U.S. President Donald Trump's statement that negotiations to end the conflict with Iran are advancing. Japan's benchmark Nikkei 225 surged by 3.1% in morning trading to reach 65,321.56. Australia's S&P/ASX 200 added 0.4%, closing at 8,692.70, while the Shanghai Composite edged up 0.4% to 4,127.53. Trading was suspended in South Korea and Hong Kong due to holidays commemorating Buddha's birthday. U.S. markets were closed on Monday for Memorial Day.
Peace Talks Progress
Trump indicated that discussions with Iran were “proceeding in an orderly and constructive manner.” Regional officials informed The Associated Press on Sunday that the United States is nearing an agreement with Iran that would end the war, reopen the Strait of Hormuz, and require Iran to surrender its stockpile of highly enriched uranium. The reopening of the Strait of Hormuz is seen as a pivotal factor in determining oil price trends. The closure had prevented oil tankers from exiting the Persian Gulf and delivering crude to global customers. Japan, for instance, imports nearly all of its oil, with the majority passing through the strait.
Market Reactions
“Markets are rapidly transitioning from pricing geopolitical fear toward pricing a potential peace dividend as Hormuz reopening expectations pressure oil and the dollar lower,” noted analyst Stephen Innes in a commentary. Early Monday, benchmark U.S. crude dropped by $4.35 to $92.25 per barrel. Brent crude, the international standard, fell $4.16 to $99.38 per barrel. In currency trading, the U.S. dollar declined to 158.80 Japanese yen from 159.16 yen, while the euro rose to $1.1641 from $1.1605.
Wall Street Performance
On Friday, Wall Street stocks concluded their eighth consecutive winning week, marking the best such streak since 2023. This occurred despite a survey indicating that U.S. consumers are feeling increasingly pessimistic about the economy. The S&P 500 added 0.4%, moving closer to its all-time high set in the middle of the previous week. The Dow Jones Industrial Average rose by 0.6%, and the Nasdaq composite gained 0.2%. Recent earnings reports from U.S. companies that exceeded analysts' expectations also contributed to market gains. However, concerns about inflation have driven bond yields higher globally. The yield on the 10-year Treasury edged down to 4.56% on Friday from 4.57% late Thursday, but it remains significantly above its pre-war level of 3.97%.
