Asian Markets Reach Record Highs Amid US-Iran Tensions and Diplomatic Uncertainty

Asian Markets Surge to New Heights Amid Global Uncertainty

Asian markets largely traded higher on Monday, despite fresh diplomatic tensions between the US and Iran, and rising Middle East unrest that kept oil prices firm. The Nikkei 225 in Japan gained 0.53% to reach a record high, while South Korea's Kospi surged 1.5% to hit a new peak of 6,557.

In contrast, Australia's S&P/ASX 200 declined 0.54%. Hong Kong's Hang Seng index futures stood at 26,041, slightly above the previous close of 25,978.07. The Gift Nifty index in India signalled a positive opening of the Indian stock market on Monday, with the index up 137 points or 0.57%, trading at 24,086 as compared to the previous close of 23,954.

The ongoing uncertainty surrounding US-Iran tensions and broader developments in the Middle East continues to weigh on risk sentiment, particularly given concerns over potential supply disruptions in the Strait of Hormuz. Brent crude remains elevated, trading in the $105–108 per barrel range, and continues to act as a key overhang on market sentiment.

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Markets opened on a subdued note after attempts to revive negotiations between the US and Iran broke down over the weekend. US President Donald Trump on Saturday called off plans to send American envoys Steve Witkoff and Jared Kushner to Islamabad, Pakistan, for talks with Iran.

The ongoing rally faces a crucial test this week amid upcoming policy decisions from the Federal Reserve and the European Central Bank, along with earnings reports from major technology companies. Oil prices surged around 2% after the proposed second round of US-Iran peace negotiations collapsed once again. Global benchmark Brent crude futures climbed over 2% to $107.49 per barrel, while US crude also gained 1.79% to reach $96.19.

Tensions in the Strait of Hormuz remained elevated after Iran's Revolutionary Guard reportedly seized two cargo vessels near the critical shipping route. US futures traded slightly lower, with Dow Jones Industrial Average futures down 0.2% (around 130 points). S&P 500 futures declined 0.3%, while Nasdaq 100 futures also slipped 0.3%.

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In the previous US session on Friday, the S&P 500 and Nasdaq Composite ended at record highs. The S&P 500 rose 0.8% to close at 7,165.08, while the tech-heavy Nasdaq gained 1.63% to settle at 24,836.60, with both indices also hitting fresh intraday peaks.