Asian stocks rise as Iran cites progress in US peace talks

SYDNEY: Asian stock markets rose on Monday after Iranian negotiators said progress had been made in peace talks with the United States, easing investor concerns that the process was weakening.

Officials from Qatar and Pakistan also said the first session of talks had concluded and that progress had been made on a roadmap for a final deal within 60 days.

The development helped calm markets after US President Donald Trump earlier threatened fresh attacks on Iran as Vice President JD Vance met Iranian officials for the first talks under an interim peace deal.

The talks had been overshadowed by Tehran’s announcement that it had again closed the Strait of Hormuz. Tracking sites showed fewer vessels transiting the route after 32 ships passed through on Friday and 26 on Saturday.

Oil prices eased after the reported progress in talks. Brent crude futures gave up early gains and slipped 0.4% to $80.17 a barrel, well below their May peak of $126.41. US crude remained 1.2% higher at $77.52 a barrel.

Japan’s Nikkei rose 1.9%, extending gains after climbing nearly 8% last week to record highs. South Korea’s market gained another 2.6%, following an 11% jump last week on demand for semiconductor stocks.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.0%, while Chinese blue chips were largely unchanged.

US and European equity futures were mixed. S&P 500 futures pared early losses to trade 0.2% lower, while Nasdaq futures fell 0.3%. EUROSTOXX 50 futures slipped 0.1%, DAX futures were nearly flat and FTSE futures gained 0.1%.

Treasuries remained under pressure after the Federal Reserve’s hawkish shift last week, which led markets to price in a 75% chance of a rate hike as early as September.

Futures now imply 38 basis points of tightening by the end of the year. Yields on two-year US Treasury notes rose as much as four basis points to 4.2276%, their highest level since early 2025.

Fabio Bassi, head of cross-asset strategy at JPMorgan, said the bank’s baseline view was for patience and a first rate hike in the second half of 2027, but said risks of earlier hikes had increased.

He said JPMorgan remained constructive on risk assets, with labour market improvement expected to keep rates higher for longer and support quality growth, large-cap and technology stocks.

The Federal Reserve’s preferred core inflation measure is due on Thursday and is expected to rise to 3.4% in May. Federal Reserve Governor Christopher Waller and Federal Reserve Bank of New York President John Williams are also scheduled to speak this week.

The dollar remained supported by the Federal Reserve outlook, trading at 161.48 yen. The threat of Japanese intervention kept attention on resistance near 161.96, a level last seen in mid-2024.

The euro eased to $1.1464 after touching a three-month low of $1.1418 on Friday.

Sterling fell 0.2% to $1.3210 amid reports that UK Prime Minister Keir Starmer was considering his political future after Andy Burnham’s election victory to parliament increased pressure within the governing Labour Party.

Skye Masters, head of market research at NAB, said uncertainty over a possible challenge to the UK prime minister and its implications for the fiscal outlook could keep gilts under selling pressure at the start of the week.

In commodities, gold rose 1.1% to $4,205 an ounce as investors assessed the latest developments in US-Iran talks and the outlook for monetary policy.