Shares edged higher while oil prices flatlined in Asia on Monday as investors drew comfort
from signs of patchy progress in settling the Middle East
conflict at the start of a week packed with earnings and key
economic data.
The Japanese yen suddenly jumped in Asian trading, with the
dollar falling as much as 0.9% to 155.7 yen before
paring some of the losses. Traders are on alert for another
intervention after Tokyo stepped into the market to shore up the
currency last week.
President Donald Trump said the U.S. would begin an effort
to free up ships stranded in the Strait of Hormuz on Monday
morning, though he gave no details of the plan.
A statement from the U.S. Central Command said support would
include guided-missile destroyers, over 100 land- and sea-based
aircraft and 15,000 service members. A report from Axios later
claimed the Navy would not necessarily escort ships through the
strait.
Iran earlier said the U.S. had responded to its 14-point
proposal via Pakistan and it was reviewing the response, though
Trump said it was unlikely to be acceptable.
Investors decided to reserve judgement and left Brent crude
futures up just 0.2% at $108.36 per barrel, having
recovered from an initial drop of more than 2%, while U.S. crude
eased 0.1% to $101.85.
Dealers noted a bulk carrier had reported being attacked by
multiple small craft while transiting past Sirik in Iran on
Sunday, though it was not clear how many ships would try to run
through the Strait of Hormuz even with Navy protection.
A holiday in Japan made for thin trading conditions, leaving
Nikkei futures up only modestly at 59,810 versus a cash
close of 59,513.
MSCI’s broadest index of Asia-Pacific shares outside Japan
gained 3%, led by tech-heavy South Korean stocks
which returned from holiday with a jump of 4.6%. Hong
Kong’s Hang Seng index gained 1.7%.
EUROSTOXX 50 futures and DAX futures each
added 0.3%. S&P 500 futures gained 0.1% and Nasdaq
futures rose 0.3%, as markets braced for more than 100
earnings reports this week.
Companies reporting include Advanced Micro Devices,
Super Micro Computer, Palantir, Walt Disney
and McDonald’s.
The S&P 500 EPS growth rate was running at 25% and
accounting for one-off gains at a still brisk 16%, said analysts
at Goldman Sachs in a note.
“Despite elevated energy prices and geopolitical
uncertainty, corporate guidance and analyst estimate revisions
have remained strong so far this quarter,” they said. “However,
the reward for EPS beats has been unusually small.”
CENTRAL BANKS WARN OF INFLATION RISKS
Concerns remained about the scale of artificial intelligence
capex investment which was now at $751 billion for 2026, $80
billion above estimates at the start of the earnings season and
83% above 2025 spending.
The threat of oil-driven inflation had also lifted bond
yields in a challenge to equity valuations, while several major
central banks had turned hawkish on policy.
Markets implied just 2 basis points of easing from the
Federal Reserve by the end of the year compared with 11 basis
points a week ago. Expectations for the European Central Bank
had climbed to 76 basis points of hikes, with the Bank of
England at 63 basis points.
Australia’s central bank meets on Tuesday and is considered
likely to hike its cash rate for a third time running as it
battles stubborn inflationary pressures.
The outlook for Fed policy could be budged by a raft of data
this week which includes the payrolls report for April on
Friday. Median forecasts are for a rise of 60,000 in jobs
following March’s outsized 178,000 gain, though problems with
seasonal adjustment make for much uncertainty.
In currency markets, the dollar was a shade softer as
investors waited for more developments in the Middle East and,
crucially, whether the Strait of Hormuz could be opened.
The dollar was last 0.4% lower at 156.54 yen,
having dived to as low as 155.7 yen earlier, as traders smarted
from last week’s Japanese intervention which analysts thought
could have amounted to around $35 billion.
“Given the size of the move, I doubt it was the MoF stepping
into the market again,” said Carol Kong, a currency strategist
at the Commonwealth Bank of Australia. “Japan and the UK are
both on holidays today so it was likely simply market choppiness
amid thinner than usual liquidity.”
“But fundamentals remain in favour of USD/JPY, meaning
USD/JPY will sooner or later recover and force the MoF’s hand
again.”
The euro was flat at $1.1726, while the pound held
at $1.3584 ahead of local elections in Britain which
could see heavy losses for the ruling Labour Party.
In commodity markets, gold was flat at $4,610 an ounce
, and well within recent trading ranges.
(Reporting by Wayne Cole; Additional reporting by Ankur
Bangerjee in Singapore; Editing by Thomas Derpinghaus)