Asian Markets Mixed as Oil Prices Surge Amid U.S.-Iran Tensions

Asian stock markets exhibited mixed results on Monday, influenced by Wall Street's recent record highs and a significant surge in oil prices exceeding 3%. This uptick followed U.S. President Donald Trump's dismissal of Iran's response to the latest U.S. ceasefire proposal.

In Tokyo, the Nikkei 225 declined by 0.5% to close at 62,417.88, despite reaching an intraday record above 63,300. This downturn was partly due to a more than 6% drop in SoftBank Group shares. Conversely, South Korea's Kospi rose by 4.3% to 7,822.24, achieving an all-time intraday high, driven by gains in technology stocks such as Samsung Electronics and SK Hynix.

Hong Kong's Hang Seng edged up by less than 0.1% to 26,401.76, while China's Shanghai Composite increased by 1.1% to 4,225.02. The latter's rise was supported by official data indicating a 2.8% year-on-year increase in China's factory gate prices for April, the highest since 2022, along with better-than-expected export figures released over the weekend.

Oil prices experienced a notable surge early Monday due to escalating tensions in the Middle East. Brent crude, the international benchmark, climbed 3.6% to $104.89 per barrel, while U.S. crude rose 3.9% to $99.15 a barrel. This increase followed President Trump's social media statement labeling Iran's response to the U.S. ceasefire proposal as "TOTALLY UNACCEPTABLE!"

The Strait of Hormuz, a critical channel for global oil and gas transportation, remains largely closed, with the U.S. continuing its naval blockade of Iranian ports. Analysts suggest that these factors are likely to sustain elevated oil prices.

The ongoing conflict with Iran is expected to be a key topic in the upcoming meeting between President Trump and Chinese leader Xi Jinping later this week. China maintains close economic ties with Iran, and the U.S. has been urging Beijing to leverage its influence to help reopen the Strait of Hormuz.

"There remains a glimmer of hope that talks between Trump and Chinese President Xi later this week could yield positive results on Iran," noted ING commodities analysts Warren Patterson and Ewa Manthey in a Monday report. They added, "The hope is that China can use its influence over Iran to push it closer towards a peace deal. Clearly, this is easier said than done."

On Friday, Wall Street reached new records, with the S&P 500 increasing by 0.8% to 7,398.93, driven by optimism following a robust U.S. job market report that exceeded analysts' expectations despite the ongoing conflict with Iran. The Dow Jones Industrial Average saw a marginal rise to 49,609.16, while the Nasdaq composite climbed 1.7% to a record 26,247.08.

In currency markets, the U.S. dollar strengthened to 157.06 Japanese yen from 156.61 yen. The euro traded at $1.1769, down from $1.1780.