- Asian stock markets opened higher amid easing US-Iran tensions and falling crude prices
- South Korea's Kospi rose 1.20%, Australia's ASX 200 gained 0.84%, Japan's Nikkei 225 up 0.04%
- Brent crude dropped over 5% to $92 a barrel; US oil fell about 5% to $85 per barrel
Asian stock markets opened higher on Monday as easing concerns over the conflict between the United States and Iran lifted investor sentiment, while a sharp decline in crude oil prices supported equities ahead of a busy week for major central banks.
South Korea's Kospi advanced 1.20%, Australia's ASX 200 gained 0.84%, and Japan's Nikkei 225 edged 0.04% higher.
The rebound came after Tehran indicated it would suspend military operations provided Washington maintained its halt in attacks, raising hopes that the recent escalation in the Middle East may not intensify further. Officials from Iran and Oman also held discussions on shipping through the Strait of Hormuz, easing concerns over disruptions to a vital global energy corridor.
Oil prices reacted sharply to the developments. Brent crude dropped more than 5% to around $92 a barrel, while U.S. West Texas Intermediate fell about 5% to roughly $85 a barrel as traders pared geopolitical risk premiums built into the market over the past two weeks.
Despite the improvement in sentiment, geopolitical risks remained elevated. Iran accused Ukraine of carrying out a "hostile and criminal act" after Kyiv reportedly struck an Iranian commercial vessel in the Caspian Sea, underscoring the fragile security environment.
Investors are now looking ahead to a series of central bank decisions from the Group of Seven economies. The U.S. Federal Reserve is scheduled to announce its policy decision on Wednesday, followed by the Bank of England and the Bank of Japan. Although markets broadly expect interest rates to remain unchanged, policymakers' assessment of inflation risks arising from higher energy prices will be closely scrutinised.
The recent surge in crude prices had complicated the outlook for monetary policy even after softer U.S. inflation data eased concerns over immediate policy tightening. At the same time, robust spending on artificial intelligence and the Trump administration's latest tariff measures have added to uncertainty over the future path of interest rates.
Wall Street ended last week on a weak note as technology shares remained under pressure. The S&P 500 fell 0.6% and the Nasdaq Composite lost 2.1%, both recording a second straight weekly decline, while the Dow Jones Industrial Average slipped 0.4% to register its third consecutive weekly loss.
However, U.S. equity futures pointed to a firmer start. Futures linked to the Dow Jones Industrial Average climbed 244 points, or 0.5%, while S&P 500 futures rose 0.6%. Nasdaq-100 futures outperformed with a gain of 1.2%, suggesting investors were returning to growth stocks after last week's selloff.
Market participants are expected to remain focused on developments in the Middle East, guidance from central banks and the outlook for inflation as they assess whether the latest improvement in risk sentiment can be sustained.
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