Asian stock markets rallied on Monday following statements from Iranian negotiators indicating advancement in diplomatic talks with the United States, easing global market anxieties over a potential breakdown in negotiations. Mediators from Qatar and Pakistan supported this optimism, announcing that the initial session concluded with an established roadmap aimed at finalizing a peace agreement within 60 days. These positive developments counterbalanced earlier friction, including military threats from U.S. President Donald Trump and a temporary shutdown of the critical Strait of Hormuz shipping corridor by Tehran. As a result, Brent crude futures gave up early gains to settle slightly lower at $80.17 per barrel, while regional indices in Japan and South Korea posted strong gains, though Western equity futures remained somewhat cautious.
Concurrently, global bond and currency markets adjusted to an increasingly hawkish stance from the Federal Reserve, with trading desks pricing in a 75% probability of an interest rate hike by September. Short-term Treasury yields hit multi-year highs, though analysts at JPMorgan noted that a resilient labor market continues to support large-cap growth and technology equities. Meanwhile, the U.S. dollar remained robust against the Japanese yen, the euro hovered near a three-month low, and the British pound retreated amid reports of a leadership challenge against UK Prime Minister Keir Starmer. Safe-haven gold caught a bid alongside the diplomatic progress, rising over 1% to trade at $4,205 per ounce.
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