Oil prices saw a decline, with Brent crude easing to around $79 a barrel and West Texas Intermediate near $75, after initial gains were reversed. This happened despite an earlier threat from US President Donald Trump against Iran, as Washington and Tehran reported progress in peace talks. The parties have agreed on a roadmap for a final deal to be reached within 60 days, with technical discussions continuing throughout the week, according to mediators Qatar and Pakistan.
Asian stock markets, in contrast, experienced a rally. Japan's Nikkei 225 index climbed 1.9%, building on an 8% gain from the previous week. South Korea's market added 2.6% after surging more than 11% last week, driven by demand for semiconductor stocks. MSCI's broadest index of Asia-Pacific shares outside Japan increased by 1.0%, though Chinese blue chips remained flat.
The initial volatility in markets was attributed to the rocky start of the US-Iran peace talks, which featured President Trump's threat against Iran and Tehran's temporary closure of the Strait of Hormuz. Despite these tensions, the reported progress in negotiations helped calm market fears. Gold prices also bounced, rising by 1.1% to $4,205 per ounce, reflecting the shift in market sentiment. Meanwhile, the Federal Reserve's hawkish stance continued to exert pressure on Treasuries, with a 75% chance of a rate hike by September being priced in by markets. The dollar remained strong against the yen at 161.48, while the euro eased to $1.1464.
