BANGKOK (AP) — Asian share prices experienced a significant surge on Monday following the announcement of a tentative deal aimed at ending the conflict in Iran and reopening the strategically vital Strait of Hormuz. Major benchmarks in Tokyo and Seoul opened with gains surpassing 5%, while oil prices took a notable dip, dropping more than $4 a barrel.
The futures for the S&P 500 climbed 1%, and those for the Dow Jones Industrial Average increased by 0.9%, signaling a probable positive start for Wall Street. U.S. President Donald Trump confirmed the initial agreement, lifting the naval blockade on Iranian ports.
Although Iran acknowledged the deal, it indicated that the implementation would not commence until a formal signing expected to take place on Friday in Switzerland. Negotiations will continue over the next 60 days, addressing broader issues like Iran's nuclear program.
In initial trading on Monday, the price of Brent crude oil, the international standard, fell by $3.61 to reach $83.64 per barrel, while U.S. benchmark crude declined by $4.27 to settle at $80.61 per barrel. Energy experts have cautioned that it may take months for oil prices to stabilize after the conflict-induced surge that had significantly impacted global markets.
Stephen Innes of SPI Asset Management noted that the reopening of the Strait of Hormuz serves as a "relief valve" rather than a complete peace dividend. He stated that while market fears over crude oil may lessen, investors still need to consider the gap between a mere announcement and actual compliance from Iran’s regime.
The recent developments brought considerable relief to markets that have been in turmoil since the conflict broke out in late February. The peace deal promises to ease economic tensions more than three months after hostilities erupted.
In Asia, stocks demonstrated robust growth, with Tokyo's Nikkei 225 rising by 5.4% to close at 69,603.91, marking another record high. There was a notable increase in technology shares, particularly those connected to artificial intelligence, which have been significant drivers for Japan's market, boasting gains exceeding 80% over the past year.
Chief strategist Takashi Hiroki from Monex remarked that this development signifies "great news," attributing increased foreign investor buying as a major driver of market positivity alongside the downturn in crude oil futures.
The Kospi in Seoul surged by 4.9% to 8,517.93, while Hong Kong's Hang Seng gained 0.6% to reach 24,867.94, and the Shanghai Composite index rose by 1.1% to finish at 4,073.08. Australia’s S&P/ASX 200 advanced 1.4% to 8,922.90, and Taiwan's Taiex experienced a 2.5% increase.
On the previous Friday, U.S. stocks rallied as SpaceX made a highly anticipated debut on Wall Street. The strong performance of SpaceX, which surged 19.2% in its inaugural trading day, indicated robust demand from investors, valuing the company at $2.1 trillion, thus surpassing the combined value of Exxon Mobil, Bank of America, and Coca-Cola. In addition to its space endeavors, SpaceX also encompasses the artificial intelligence company xAI.
In the U.S. markets, the S&P 500 finished the week with a gain of 0.5%, achieving its 10th winning week in the last 11. The Dow industrials rose by 353 points, or 0.7%, while the Nasdaq composite increased by 0.3%.
This week is significant, as interest rate decisions are anticipated from both the Federal Reserve and the Bank of England on Thursday, in addition to an expected announcement from the Bank of Japan regarding its monetary policy updates on Tuesday, with an anticipated increase of its benchmark interest rate to 1% from the current 0.75%, marking the highest rate in over 30 years.
In the currency market, the dollar saw a slight increase against the Japanese yen, rising to 160.20 yen from 160.12, while the euro climbed to $1.1595 from $1.1578.
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