Witness history! The reopening of the Strait of Hormuz between the US and Iran is expected to ignite the bull market in the Asia-Pacific region, with the Nikkei 225 breaking 65000 points for the first time and setting a record!
News of the potential reopening of navigation through the Strait of Hormuz has boosted the Japanese Nikkei 225 index, which surpassed the 64,000 point level for the first time in history on Monday.
Notice that with the news that the possibility of the Strait of Hormuz reopening for navigation in the short term has boosted oil prices, market sentiment has warmed, and the Nikkei 225 index in Japan broke through the 65,000-point milestone for the first time in history on Monday, setting a new record high during the quiet trading hours of the Asian holiday period.
President Trump posted on Truth Social, stating that negotiations with Iran are proceeding in an orderly and constructive manner, and adding that he has instructed his representatives "not to rush to reach an agreement, as time is on [their] side."
Following Trump's comments, oil prices fell more than 5%, easing pressure on investors. Previously, oil prices had surged after the Trump administration imposed a blockade on Iranian ports and Iran effectively closed the Strait of Hormuz, one of the world's most important energy passageways.
During early Asian trading, WTI futures for July delivery fell by 4.52% to $92.23 per barrel. Brent crude futures for July delivery fell by 4.51% to $98.87 per barrel.
The Nikkei 225 index in Japan rose by 3%, breaking through the 65,000-point mark to set a new all-time high, while the TOPIX index rose by 0.65%.
The Australian S&P/ASX 200 index remained flat.
The Hong Kong and South Korean stock markets were closed for public holidays. The U.S. stock market will also be closed on Monday for Memorial Day.
During Friday's regular trading session, the Dow Jones Industrial Average rose by 294.04 points, or 0.58%, to close at 50,579.70 points. The 30-stock index hit an intraday record high and closed at a new high. The S&P 500 index rose by 0.37% to close at 7,473.47 points. The Nasdaq Composite index climbed by 0.19% to close at 26,343.97 points. U.S.-Iran talk agreement "emerges".
Optimistic expectations of the Strait of Hormuz reopening for crude oil transport have boosted market risk appetite, with oil prices and the U.S. dollar falling, and U.S. stock futures rising, in addition to the rally in the Japanese stock market.
This crisis began when the U.S. and Iran attacked each other in February, causing chaos in the global energy market. The conflict quickly spread to the entire Persian Gulf region, forcing producers to shut down daily production of millions of barrels of crude oil. The Strait of Hormuz, which connects the region to global markets, had been under a dual blockade by Tehran and Washington.
This channel typically handles about one-fifth of global oil and liquefied natural gas supply during peacetime, and its full reopening will be a relief for energy-importing countries in Asia, including Japan and South Korea.
After the U.S. and Iran reached a ceasefire agreement in April, followed by weeks of deadlock, market sentiment is now on the rise, with traders closely watching the economic consequences of the conflict. U.S. consumer confidence fell to a record low in May, while long-term inflation expectations significantly deteriorated.
This week, U.S. personal consumption expenditure (PCE) data and inflation data from across Europe will be in the spotlight. Bond yields have surged to multi-year highs due to concerns that price pressures will remain high and force central banks to raise interest rates. Traders have fully digested expectations of a Fed rate hike by the end of the year, underscoring market expectations for Kevin Warsh to act quickly in response to inflation.
Strategists predict that even if the U.S.-Iran agreement can alleviate inflation pressures driven by oil, global bond yields will remain at high levels. Investors are also grappling with concerns that the already sizeable public debt burden will continue to increase, while the demand for funds from the artificial intelligence (AI) investment frenzy is putting further pressure on global financing markets.
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