Asian shares mostly rose on Monday, with Japan's benchmark Nikkei index climbing 1,819.12 points, or 2.87 percent, from Friday to close at 65,158.19, marking a significant milestone above the 65,000 level [1]. Australia's S&P/ASX 200 added 0.4% to 8,692.00, and the Shanghai Composite gained 0.8% to 4,143.97 [1]. Trading was closed in South Korea and Hong Kong due to holidays, and U.S. markets were also closed for Memorial Day [1].
The rally in Asian markets was driven by optimism after U.S. President Donald Trump stated that negotiations with Iran to end the war were 'proceeding in an orderly and constructive manner' [1]. Regional officials reported that the United States is close to reaching a deal with Iran that would end the war, reopen the Strait of Hormuz, and see Iran give up its stockpile of highly enriched uranium [1]. The reopening of the Strait of Hormuz is seen as a critical factor for oil prices, as its closure has prevented oil tankers from delivering crude globally, impacting countries like Japan that rely heavily on oil imports through the strait [1].
Oil prices plunged on the news, with benchmark U.S. crude dropping $5.52 to $91.08 a barrel and Brent crude falling $5.56 to $97.08 a barrel [1]. Analyst Stephen Innes commented that 'markets are rapidly transitioning from pricing geopolitical fear toward pricing a potential peace dividend as Hormuz reopening expectations pressure oil and the dollar lower' [1]. In currency trading, the U.S. dollar declined to 158.91 Japanese yen from 159.16 yen, and the euro rose to $1.1639 from $1.1605 [1].
On Wall Street, stocks ended their eighth consecutive winning week, the best streak since 2023, with the S&P 500 up 0.4%, the Dow Jones Industrial Average rising 0.6%, and the Nasdaq composite gaining 0.2% on Friday [1]. Despite positive earnings reports, concerns about inflation have kept bond yields elevated, with the 10-year Treasury yield at 4.56% on Friday, down slightly from 4.57% on Thursday but still well above its pre-war level of 3.97% [1].
CONCLUSION
Asian markets rallied strongly on optimism for a U.S.-Iran peace deal, with the Nikkei closing above 65,000 and oil prices plunging on expectations of the Strait of Hormuz reopening. Market sentiment has shifted from geopolitical fears to hopes for stability, though inflation concerns and high bond yields remain in focus.