Asian markets traded mixed on Monday as investors positioned themselves ahead of the release of minutes from the U.S. Federal Reserve's June policy meeting, while keeping a close watch on movements in the Japanese yen and South Korean won.
South Korea's Kospi rose 1.08%, outperforming regional peers. Japan's Nikkei 225 slipped 0.25%, while Australia's ASX 200 edged 0.08% lower.
Market participants are looking ahead to the Federal Reserve's June meeting minutes, due on Wednesday, for further clues on the direction of U.S. monetary policy. The meeting was the first chaired by Federal Reserve Chairman Kevin Warsh, making investors keen to assess policymakers' views on inflation and interest rates.
Currency markets also remained under scrutiny. The Japanese yen traded at 161.54 against the U.S. dollar after touching its weakest level in 40 years last week, fuelling speculation over whether Japanese authorities could intervene to support the currency. South Korea's won also softened by about 0.25% to 1,532.82 per dollar following the start of 24-hour currency trading.
Oil prices extended their decline as improving crude flows through the Strait of Hormuz and OPEC+'s decision to raise production targets fuelled expectations of higher global supply.
Brent crude slipped below $72 a barrel, while West Texas Intermediate traded near $68. The latest decline followed signs that tanker traffic through the Strait of Hormuz was returning to normal after several vessels resumed their journeys through the waterway. The recovery in shipping comes after an interim peace agreement between Washington and Tehran eased concerns over supply disruptions.
Additional pressure came from OPEC+, which agreed to increase production targets by 188,000 barrels a day from August after similar quota increases in June and July. The move signals that the producer group is continuing to restore output as conditions in the Gulf improve, although much of the planned increase has yet to reach global markets.
Oil has now largely erased the gains triggered by the conflict in the Middle East. Brent prices have fallen about 30% since peaking during the conflict and recently returned to levels seen before hostilities escalated in late February. Market sentiment has also been weighed down by weaker crude imports into China, rising production outside the Middle East and coordinated releases from strategic petroleum reserves.
U.S. equity futures pointed to a mixed start. Futures linked to the Dow Jones Industrial Average eased 28 points, while S&P 500 futures rose 0.4%. Nasdaq-100 futures outperformed with a 1.3% gain, indicating continued demand for technology shares ahead of the U.S. trading session.
In commodities, gold surrendered early gains to trade around $4,175 an ounce, while silver added 0.4% to about $62.66 an ounce as investors balanced expectations for U.S. interest rates with demand for safe-haven assets.
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