Asian stocks moved higher on Monday as a pause in military action between the United States and Iran reduced immediate concerns about disruption to Middle Eastern energy supplies. Oil prices fell sharply, supporting equities and government bonds while weakening demand for the US dollar as a defensive asset.
Brent crude dropped below US$90 a barrel during Asian trading before recovering part of its decline. The move followed a pause in US strikes against Iran after almost two weeks of military action. Iran also said it had suspended its response, while talks involving Iranian and Omani officials raised expectations that shipping through the Strait of Hormuz could continue without further disruption.
The Strait of Hormuz remains a critical route for global oil supplies, making any improvement in regional stability relevant to energy prices, inflation expectations and monetary policy. A sustained reduction in oil prices could lower fuel, transport and manufacturing costs, particularly across Asian economies that rely heavily on imported energy.
The broader MSCI Asia-Pacific equity index rose 0.4% as market sentiment improved. Japan’s Topix gained 0.6%, while Australia’s S&P/ASX 200 advanced 0.9%. Hong Kong and mainland Chinese shares also moved higher, with the Hang Seng gaining around 1% and the Shanghai Composite rising approximately 1.2%.
Technology shares received additional support following selling pressure in the previous week. Nasdaq 100 futures rose more than 1%, while S&P 500 futures also advanced. The rebound places greater attention on upcoming results from Microsoft, Meta Platforms, Apple and Amazon, as markets assess whether large investments in artificial intelligence infrastructure are producing sufficient commercial returns.
Lower oil prices also reduced some of the concern that higher energy costs could lead central banks to maintain tighter monetary policy. US Treasury prices rose, pushing the 10-year yield lower to around 4.63%. Government bonds in Australia and New Zealand also strengthened as inflation expectations eased.
The US dollar weakened against most major currencies after benefiting from demand for safer assets during the recent escalation. The yen strengthened against the dollar, while gold rose as declining bond yields improved the relative appeal of assets that do not pay interest.
Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.
