Markets across Asia experienced gains on Monday while petroleum prices dropped significantly following statements from U.S. President Donald Trump indicating that diplomatic efforts to conclude the conflict with Iran are advancing.
Japan’s primary Nikkei 225 index jumped 3.1% during morning sessions, reaching 65,321.56. Australia’s S&P/ASX 200 climbed 0.4% to 8,692.70, while the Shanghai Composite increased 0.4% to 4,127.53.
Markets remained closed in South Korea and Hong Kong due to holiday observances for Buddha’s birthday. U.S. trading will also be suspended Monday in observance of Memorial Day.
Trump characterized the diplomatic discussions with Iran as “proceeding in an orderly and constructive manner.” Additionally, regional officials informed The Associated Press on Sunday that the United States is approaching an agreement with Iran that would conclude the conflict, restore access to the Strait of Hormuz, and require Iran to surrender its reserves of highly enriched uranium.
The potential reopening of the Strait of Hormuz represents a crucial factor for petroleum market direction. The current blockade has stopped oil vessels from leaving the Persian Gulf and transporting crude to global customers. Japan, which relies on imports for nearly all its oil supply, receives most shipments through this waterway.
“Markets are rapidly transitioning from pricing geopolitical fear toward pricing a potential peace dividend as Hormuz reopening expectations pressure oil and the dollar lower,” analyst Stephen Innes said in a commentary.
During early Monday trading, benchmark U.S. crude dropped $4.35 to $92.25 per barrel. Brent crude, the global benchmark, fell $4.16 to $99.38 per barrel.
Currency markets saw the U.S. dollar weaken to 158.80 Japanese yen from 159.16 yen. The euro increased to $1.1641, rising from $1.1605.
Wall Street concluded Friday with stocks completing their eighth consecutive week of gains, marking the longest winning streak since 2023. This occurred despite survey data indicating U.S. consumers have grown more pessimistic about economic conditions.
The S&P 500 increased 0.4% and moved nearer to its record high established earlier in the week. The Dow Jones Industrial Average gained 0.6%, while the Nasdaq composite advanced 0.2%.
Strong earnings reports from U.S. corporations that exceeded analyst forecasts provided additional market support. However, concerns about inflation have driven bond yields upward globally.
The 10-year Treasury yield decreased slightly to 4.56% on Friday from Thursday’s 4.57%, though it remains significantly above the pre-war level of 3.97%.
