Singapore, May 25, 2026, 18:04 (SGT)
Asian stocks moved higher Monday. Japan’s Nikkei finished above 65,000, a first, as some investors stepped up buying after signs of revived U.S.-Iran talks knocked down oil prices and the dollar. Gains were strong, but with markets in Hong Kong and South Korea closed for holidays, trade was lighter in some spots.
Oil’s rally is key since it’s been the market’s drag most of this year. Higher energy prices from almost three months of Middle East conflict have shifted the interest-rate discussion. If the Strait of Hormuz, which handles much of the world’s oil and liquefied natural gas, reopens, that would help cut inflation and take some strain off Asian energy buyers.
Risk appetite ticked up after U.S. President Donald Trump said Washington and Tehran had “largely negotiated” a memorandum of understanding. But on Sunday he told reporters his representatives should not rush, so traders were left to price in hope instead of a full deal. Reuters
Japan’s Nikkei 225 jumped 2.87% to 65,158.19, pacing gains in Asia. Taiwan stocks finished at a record high, closing at 43,644. Shanghai’s main index added 0.96%. Australia’s All Ordinaries rose 0.43%. India’s Sensex climbed 1.41% on LSEG data, which was delayed. Hong Kong’s stock market stayed closed after Buddha’s birthday. South Korea’s market was shut for the holiday too.
In Tokyo, investors snapped up AI and semiconductor stocks, the sectors fuelling Asia’s equity gains this year. Lasertec and Fujikura surged over 11%. Oil explorer Inpex lost 3.9% as crude prices dropped. Maki Sawada, equity strategist at Nomura Securities, pointed to lower oil, stronger Japanese government bonds, and a firmer yen as signs of firmer risk appetite, but flagged that the 65,000 level for the Nikkei is “a psychological milestone” and could trigger some selling. The Economic Times
India’s market picked up with oil’s climb. The country, which imports a lot of its energy, saw all 16 major sectors in the green early, Reuters said. State fuel sellers BPCL, HPCL and Indian Oil gained between 4% and 4.5%. HDFC Bank, ICICI Bank and Eicher Motors also moved higher.
“Easing concerns around Middle East tensions have improved the overall risk appetite among investors,” said Hitesh Tailor, research analyst at Choice Equity Broking. He said this could help bullish momentum in the near term. But Reuters quoted analysts flagging possible resistance around 24,000 on the Nifty, as traders want stronger signs of a deal. Reuters
Oil slumped. Brent crude lost close to 5%, sinking under $100 a barrel. West Texas Intermediate slid too, down nearly 5%. The U.S. dollar index slipped, the yen strengthened to about 158.96 per dollar, and the euro moved higher. Investors were shifting away from some safe plays and returning to equities.
Markets care less about the precise deadline and more about the tone out there, Chris Weston at Pepperstone said. “The tone has been consistently towards some sort of resolution,” Weston told Reuters. Reuters
But risks are still straightforward. Both Tehran and Washington have backpedaled on any suggestion of a quick deal. The blockade of Iranian ships at the Strait of Hormuz holds until there is an agreement. Kyle Rodda, senior financial market analyst at Capital.com, listed unresolved points like Iran’s nuclear agenda, uranium enrichment and the future of the strait. Any deal could just be a stopgap, he said, little more than a prolonged truce.
Rates present another risk. Markets have priced in a 25-basis-point hike from the Federal Reserve for January 2027, according to Reuters. One basis point equals one-hundredth of a percentage point. Bruno Schneller, managing partner at Erlen Capital Management, said the Fed is in a tough spot as consumers feel the pinch from higher borrowing costs and inflation is still elevated.
Markets this week look quiet, with U.S. exchanges closed Monday for Memorial Day and UK markets also on holiday. That means less liquidity. Traders are watching for U.S. ADP jobs numbers out Tuesday, euro zone confidence numbers Thursday, and Tuesday’s reopening in Hong Kong to see if Asia’s rally keeps up on catch-up trades after the closure.
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