Asian markets traded mixed on Monday, as crude oil prices rose amid uncertainty over the end to the US-Iran war in the Middle East.
MSCI’s gauge of Asian stocks declined, with South Korea’s Kospi benchmark falling over 1% as markets reopened after a holiday, while Japanese shares advanced.
Japan’s Nikkei 225 rose 0.75% while the Topix gained 0.58%. South Korea’s Kospi dropped 1.07%, while the Kosdaq rallied 1.62%. Hong Kong Hang Seng index futures indicated a lower opening.
Investors remained cautious after US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz, claiming Tehran was desperate to make a deal. Trump said talks would continue this week, though Iran shows no sign of watering down its proposals.
Crude oil prices rose again on supply risks, weighing on investor sentiment. Brent futures gained 1.35% to $105.73 a barrel, WTI crude futures rose 0.96% to $93.30 a barrel.
Meanwhile, a spike in US Treasury yields also dented risk-appetite. Several US Federal Reserve officials indicated that further tightening may be needed, citing resilient economic growth and a strong labour market.
Cleveland Fed President Beth Hammack said those factors, along with concerns about government debt, are helping drive long-term Treasury yields higher, Bloomberg reported.
Traders are fully pricing at least one more 25 basis-point Fed rate hike before year-end.