Ceasefire signals and renewed talks over the Strait of Hormuz calm global energy markets, while investors shift focus to corporate earnings and central bank decisions……
Global oil markets opened the week on a weaker note after signs of easing tensions between the United States and Iran eased fears of major supply disruptions in the Middle East.
Brent crude fell more than five percent to trade around $92 per barrel, while U.S. West Texas Intermediate (WTI) dropped by a similar margin to roughly $84.45 per barrel. The sharp decline came after reports suggested both Washington and Tehran were taking steps to avoid further military escalation, raising hopes that diplomatic efforts could regain momentum.
The latest shift follows nearly two weeks of hostilities between the two countries, which had fueled concerns about the security of the Strait of Hormuz one of the world’s most critical oil shipping routes. With the United States reportedly refraining from additional strikes over the weekend and Iran signaling a halt to retaliatory attacks against regional neighbors, traders began pricing in a lower geopolitical risk premium.
Adding to the optimism were indications that discussions facilitated by Oman had resumed, focusing on maintaining safe passage for commercial vessels through the Strait of Hormuz while respecting the interests of all parties involved.
The conflict had escalated earlier this month after attacks on commercial vessels in the strategic waterway triggered a cycle of retaliation. Violence later spread beyond the Gulf, with Iran-backed Houthi fighters targeting Saudi-linked ships in the Bab al-Mandeb Strait, another vital maritime corridor connecting the Red Sea to global trade routes.
The uncertainty surrounding those developments pushed Brent crude above the $100-per-barrel mark last week for the first time in months. However, reports that shipping activity in the Red Sea continued uninterrupted, coupled with renewed diplomatic engagement, helped reverse much of those gains.
There were also reports that Pakistan is exploring efforts to help revive peace talks between Washington and Tehran, with China said to be encouraging renewed dialogue.
The easing tensions provided a boost to investor confidence across global financial markets. Lower oil prices reduced concerns that a prolonged energy shock could reignite inflation and force central banks to tighten monetary policy further.
Despite the improved sentiment, technology stocks continued to face pressure as investors questioned whether massive spending on artificial intelligence infrastructure will generate returns quickly enough to justify the investments.
South Korea’s market lagged behind many of its regional peers, with semiconductor heavyweights SK hynix and Samsung among the notable decliners. Shares also slipped in Taipei, Singapore, and Jakarta, where investor sentiment was further affected by the unexpected resignation of Indonesia’s central bank governor, Perry Warjiyo.
Japanese equities, however, managed modest gains even as technology companies such as Advantest, Kioxia, and Tokyo Electron came under selling pressure. Markets in Hong Kong, Shanghai, Sydney, Wellington, and Manila also traded higher.
Attention is now turning to a busy week for corporate earnings. Investors will closely watch results from SK hynix, Samsung, and Kioxia, while U.S. technology giants Microsoft, Meta, Apple, and Amazon are also set to report, with markets looking for updates on AI-related spending and future growth expectations.
Analysts say investor concerns remain centered on whether the enormous capital being committed to artificial intelligence will translate into meaningful returns within a reasonable timeframe.
Market participants are also awaiting the U.S. Federal Reserve’s latest policy decision. Although expectations for further interest-rate increases have grown following recent geopolitical developments, many economists believe policymakers are likely to leave rates unchanged at this meeting while keeping the door open for additional tightening later in the year.
Meanwhile, Chinese memory-chip manufacturer CXMT grabbed headlines after an explosive stock market debut in Shanghai. The company surged more than 470 percent after completing a $9.8 billion initial public offering, making it one of the largest technology listings ever on mainland China’s stock market.
