Asian Stock Markets Today: Nikkei, Kospi Rise As Wall Street Rally Boosts Sentiment; Oil Prices In Focus

Asian stock markets were mostly higher Monday morning, buoyed by a strong Wall Street rally that took the S&P 500 to a new record closing high. In Japan and South Korea, the market got some nice news of better global risk appetite but investors were optimistic on Monday but were cautious as concerns about US-Iran relations, high crude oil prices and a potential disruption in shipping through the Strait of Hormuz were still lingering.

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Japan’s Nikkei 225 was up 1.62 per cent and South Korea’s Kospi up 1%. Australia’s ASX 200 was in a different direction and slipped 0.25 per cent.

The positive handover from the US markets helped boost Asian equities early on. The S&P 500 finished at a record high of close Friday and the Dow Jones Industrial Average and Nasdaq Composite also rose. So strong was the best weekly performance for the major US benchmarks since April and contributed to the optimism of global markets.

But geopolitical developments were still one of the key areas of uncertainty for investors.

Oil prices rise as Hormuz uncertainty persists

In early Asian trading, crude oil prices extended a rally as hopes of a long-term agreement between Washington and Tehran weakened. Brent crude rose around 0.8% to above $84 a barrel, after gaining more than 5% in the past three days. Investors are closely watching developments around the Strait of Hormuz, a key shipping route for international energy supplies.

Iran has denied any direct negotiations with the US to reopen the waterway. The development has diminished optimism that shipping disruptions could ease in the near term.

Last week, US Treasury Secretary Scott Bessent said that an agreement could be close. But U.S. President Donald Trump later said Washington was only “semi-negotiating” with Tehran and was trying to keep economic pressure up.

The uncertainty has kept oil prices elevated and increased concerns about the economic impact of prolonged supply disruptions.

Higher oil prices pose inflation risk

In equity markets, the direction of crude prices could become more important. A sustained increase in energy costs could drive inflationary pressures and make it harder for central banks to ease monetary policy.

Fuel and transportation costs can then be passed on to the consumer market, which has a negative effect on economic growth as well as profits. Investors are watching whether oil prices will continue to rise or if this is a temporary phenomenon.

Japanese yen in the spotlight

Currency markets were also on investors’ radar and the Japanese yen was slightly weaker at 157.90 per US dollar.

The yen had rallied strongly on Friday after the release of US labour market data. Its movements remain particularly important for Japanese equities because currency fluctuations can influence the overseas earnings of major exporters.

A weaker yen can generally benefit Japanese exporters as overseas earnings are made more valuable in local currency when converted into domestic ones, but rapid currency moves can also create uncertainty for companies and policymakers.

And with a Wall Street rally, there is a positive lead in which to stand.

The US equities performance was also a strong support for Asian markets

The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all finished higher on Friday, while the S&P 500 reached a record close. Investors’ appetite for stocks was better than ever and created a stronger environment for Asian trading.

But US equity futures were cautious starting off the new week in the US. S&P 500 and Dow futures fell about 99 points, or 0.2%, while Nasdaq-100 futures were up about 0.1%.

The mixed futures data suggest investors may be reluctant to extend the recent rally aggressively without greater clarity on geopolitical and macroeconomic risks.

What Investors Are Watching

Markets are expected to be sensitive to developments around the Strait of Hormuz, especially any progress or deterioration in US-Iran relations.

This will also be a major driving force of crude oil markets. If oil prices continue to rise, inflation concerns and expectations for global interest rates will also be a major uncertainty.

At the same time, investors will be observing Wall Street’s record-setting rally and how long strong US equity performance can continue to support Asian markets.

The combination of a positive US market and improving risk appetite is keeping Asian equities upbeat, but geopolitical uncertainty and higher oil prices are holding investors back from turning fully bullish.