Asian share markets swung higher on Monday, June 22, after Iranian negotiators reported progress in peace talks with the United States, which helped calm fears that the process was breaking down. Officials from Qatar and Pakistan also stated that the first session of talks concluded with progress made on a roadmap to a final deal within 60 days. This positive development outweighed the earlier overshadowed talks due to Tehran's announcement of closing the Strait of Hormuz, with fewer vessels transiting after initial passages.
Japan's Nikkei rose 1.9%, building on an almost 8% gain last week to reach all-time highs. South Korea's KOSPI added another 2.6%, following a surge of over 11% last week driven by demand for semiconductor stocks. MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.0%, while Chinese blue chips remained flat. US President Donald Trump had previously threatened fresh attacks on Iran, and Vice President JD Vance was involved in these initial talks under an interim peace deal.
The news regarding peace talks impacted commodity markets, with Brent crude futures shedding early gains to ease 0.4% to $80.17 a barrel, significantly down from its May peak of $126.41. US crude remained 1.2% firmer at $77.52 a barrel. Gold, however, saw a bounce of 1.1% to $4,205 an ounce. Despite the positive sentiment in Asia, European futures showed slight dips, with EUROSTOXX 50 futures down 0.1% and DAX futures near flat, while FTSE futures added 0.1%. S&P 500 futures pared early losses to be off 0.2%, and Nasdaq futures lost 0.3%.
The hawkish stance of the US Federal Reserve last week continues to pressure Treasuries, leading markets to price in a 75% chance of a rate hike as early as September. Futures imply 38 basis points of tightening by year-end, with yields on two-year notes rising as much as four basis points to 4.2276%, the highest since early 2025. The Fed's favored gauge of core inflation, due on Thursday, is forecast to rise to 3.4% in May, indicating potential for tighter policy. The dollar remained strong against the yen at 161.48, with the euro easing to $1.1464 and sterling down 0.2% to $1.3210 due to political uncertainty.
