Asian stock markets fell on Monday, led by a sharp decline in South Korea, even as oil prices retreated after U.S. President Donald Trump cancelled planned military strikes on Iran amid efforts to reach an agreement involving the Strait of Hormuz.
South Korea's Kospi tumbled 5.50% after trading resumed, while Japan's Nikkei 225 fell 1.87% and Australia's ASX 200 declined 0.33%.
The declines came despite signs of easing tensions in the Middle East. Trump said early Sunday that he had called off an attack on Iran after Tehran and other countries in the region asked Washington to refrain from further military action while the outlines of an agreement were being worked out.
Trump said the proposed arrangement would involve the "Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT" as well as measures addressing what he described as Iran's nuclear threat.
Oil prices fell following Trump's announcement as traders reassessed the possibility of another escalation in the conflict and the risk to energy shipments through the Strait of Hormuz. Brent crude dropped $3.52 to $84.41 a barrel, while U.S. West Texas Intermediate declined $3.49 to $81.18.
The latest development followed reports on Friday that Trump had been considering another round of attacks on Iran as prospects for a diplomatic settlement weakened and energy prices climbed. Tehran, however, reacted cautiously to Trump's latest announcement.
Iran's acting defence minister, Seyyed Majid Ibn Al-Reza, said the country regarded threats against it seriously even as he characterised recent statements from Washington as part of a "psychological and cognitive warfare campaign", according to a post carried by Iranian state media on X.
U.S. equity futures moved higher as investors also turned their attention to the July employment report and another round of corporate earnings. Dow Jones Industrial Average futures gained 200 points, or 0.4%, while S&P 500 futures advanced 0.5% and Nasdaq-100 futures climbed 0.8%.
Wall Street had ended Friday higher. The Dow gained 276.97 points, or 0.53%, to close at 52,485.03. The S&P 500 rose 0.7% to 7,489.72, while the Nasdaq Composite advanced 1% to 25,373.85.
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