Asian stocks edged higher and oil prices flatlined Monday, as investors found some comfort in signs of incremental progress toward ending the Middle East conflict. A holiday in Japan left volumes thin, but MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6%, and South Korea's KOSPI jumped 2.6% on return from a holiday.
President Donald Trump said the United States would begin an effort to free ships stranded in the Strait of Hormuz. Central Command said the support would include guided-missile destroyers, over 100 aircraft, and 15,000 service members. Iran said it had responded to a U.S. proposal via Pakistan and was reviewing the response, though President Trump said it was unlikely to be acceptable.
Brent crude futures were flat at $108.30 per barrel, recovering from an initial 2% drop, while U.S. crude settled at $102.01. A bulk carrier was reported attacked by small craft near Iran's Sirik, raising doubts about how many ships will risk transiting the strait even with Navy protection.
U.S. futures were little changed as markets braced for over 100 earnings reports this week, including Apple, Walt Disney, Palantir, and McDonald's. Goldman Sachs noted that despite elevated energy prices, corporate guidance and estimate revisions have remained strong, though the reward for earnings beats has been unusually small.
Concerns remain over AI capex, now expected to reach $751 billion by 2026. The threat of oil-driven inflation lifted bond yields, and central banks are turning hawkish. Markets imply just 2 basis points of Fed easing by year-end, down from 11 points a week ago. Australia's central bank meets Tuesday and is expected to hike again.
The dollar softened slightly against the yen, still stung by last week's suspected $35 billion intervention. Gold edged 0.2% lower to $4,603 per ounce.