Substantial progress in US-Iran negotiations propelled Asian stock markets higher, drove oil prices lower, and supported a rebound in gold, as global markets sought a new equilibrium amid the repricing of geopolitical risks.
On Monday, the MSCI Asia Pacific Index rose over 1%, with Japan's Nikkei 225 hitting a fresh all-time high intraday, led by gains in technology stocks.
Concurrently, Brent crude oil turned lower after an early surge exceeding 2%, falling as much as 1.5% to retreat below $80 per barrel. Spot gold extended its intraday gain to 1%, while US stock futures pared their earlier losses.
On the news front, it was reported that Iran's Foreign Ministry spokesperson Bagheri stated that Iran and the United States reached an agreement document after 18 hours of negotiations, with the relevant text to be released by mediators Qatar and Pakistan. A joint statement from Qatar and Pakistan on platform X confirmed that the first round of high-level talks had concluded in Switzerland, with the goal of reaching a final peace agreement within 60 days, while technical-level negotiations would continue through the rest of the week.
Japanese Stocks Hit Record High, Asia-Pacific Tech Leads Gains
The Nikkei 225 index rose approximately 2% intraday to 72,752 points, setting a new historical record, with the Topix index also strengthening. South Korea, as a market heavily weighted in technology, stood out as the best performer in the Asia-Pacific region, with the regional technology stock sub-index gaining nearly 3% for the day.
Several stocks under South Korea's LG Group saw significant gains. According to reports from the Asian Business Daily, executives from LG Electronics, LG CNS, LG Innotek, and other LG Group subsidiaries were scheduled to visit NVIDIA's headquarters on Monday to discuss potential cooperation in embodied AI and robotics. This news spurred LG Electronics shares to surge over 12% intraday, with LG CNS up 14% and LG Corp. rising 7%.
Oil Prices Surge Then Retreat, Gold Supported by Safe-Haven Demand
Brent crude oil initially rose more than 2% in early trading but subsequently turned lower as news of the US-Iran negotiation progress emerged, falling as much as 1.5% to below $80 per barrel. WTI crude futures had earlier gained nearly 3% to around $78 per barrel.
Gold prices diverged from the oil trend. Spot gold extended its intraday gain to 1%, reaching $4,185 per ounce, while spot silver broke above $66 per ounce, gaining 1.85% on the day. Analysts suggest that, with geopolitical uncertainty not yet fully dissipated, precious metals continue to find support from safe-haven capital flows.
The US Dollar Index edged up 0.1%, extending last week's gains, while the British pound weakened amid market speculation regarding the political outlook for UK Prime Minister Keir Starmer.
US Stock Futures Under Pressure, Inflation Data as Key Weekly Variable
US stock futures traded lower in early trading, with S&P 500 futures down 0.4%, Nasdaq 100 futures down 0.6%, and Dow Jones Industrial Average futures falling 183 points, or about 0.4%. However, these losses narrowed as details of the US-Iran talks became clearer.
The market's core focus this week will be on Thursday's release of the May Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge. According to economist forecasts compiled by FactSet, the core PCE, excluding food and energy, is expected to show a further increase from April's level.
Following hawkish signals from the Fed's meeting last week, market expectations for the timing of an interest rate hike have been pulled forward to as early as October this year. Bond traders are closely watching this week's personal spending data to assess whether the market's current hawkish stance is justified, with the 10-year US Treasury yield rising upon the resumption of spot trading after the US Juneteenth holiday.
Tom Lee, Head of Research at Fundstrat Global Advisors, stated in a CNBC interview that factors such as potential supply chain shocks from a closure of the Strait of Hormuz could impact markets in the future, but the current environment remains generally favorable for stocks. "I think the conditions still favor equities," he said, "but we don't want to stand up and declare that the market has topped."
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