On Monday, Asian stocks mostly pulled back while oil prices rose as investors reassessed the outlook for U.S.-Iran negotiations after Trump warned Tehran that the “clock is ticking” and said the situation demanded urgency. The shift left U.S. futures down more than 0.6% and lifted the dollar to 159.02 yen, as markets focused on the risk of escalation affecting global energy flows.
In Tokyo, the Nikkei 225 fell 0.9% to 60,843.09, retreating from all-time intraday peaks above 63,000 reached last week. The move coincided with higher borrowing costs in Japan: the yield on the 10-year Japanese government bond surged to 2.8%, the highest level since the late 1990s, rising from around 2.55% just a week earlier as markets priced in a gradual shift to higher interest rates by the Bank of Japan and expectations that energy costs could keep inflation elevated.
South Korea’s market moved in the opposite direction earlier in the day, with the Kospi jumping 0.9% to 7,558.50 after trading lower, before later slipping in part due to profit-taking. The index had crossed the 8,000 mark on Friday, supported by buying tied to the artificial intelligence boom, but sentiment cooled as traders locked in gains.
Elsewhere across the region, Hong Kong’s Hang Seng lost 1.6% to 25,543.32, while the Shanghai Composite edged 0.1% lower to 4,132.24 after China reported weaker-than-expected retail data for April. Australia’s S&P/ASX 200 dropped 1.4% to 8,508.40, while Taiwan’s Taiex fell 1.1% and India’s Sensex declined 0.6%.
Oil rose after Trump posted warning language on social media that “the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them,” following a call with Israeli Prime Minister Benjamin Netanyahu. The article said investors stayed cautious because Trump has set deadlines for Iran before and then backed off, and because of uncertainty about how developments could affect the Strait of Hormuz. It also noted the strait is still mostly closed and that the U.S. has imposed its own sea blockade on Iranian ports since last month, while a drone strike over the weekend on a United Arab Emirates nuclear power plant added to escalation worries.
Brent crude climbed 1.9% to $111.31 per barrel, and benchmark U.S. crude rose 2.3% to $107.83 per barrel. The report framed the latest oil move against the backdrop of levels before the Iran war, saying Brent was roughly $70 a barrel in late February, and it added that the oil market appeared to be reacting not only to shipping activity around the strait but also to the lack of tangible results from the latest U.S. and Iran diplomacy, including last week’s widely watched summit between Trump and Chinese President Xi Jinping in Beijing.
ING commodities strategists Warren Patterson and Ewa Manthey wrote in a research note that “Re-escalation risks are increasing,” adding that while shipping activities had picked up over the past week, “this can change quickly.” They also said the oil market was responding to limited progress from the Iran-war diplomatic track, even as the White House said both the U.S. and China agreed that the Strait of Hormuz must remain open, and it said U.S. officials had hoped China could use its ties with Iran to help broker a peace agreement and reopen the strait, though it remained unclear how Beijing might do so.