Market participants are increasingly treating the recent silence from the Gulf peace negotiations as tentative stability, even as episodic military actions and cross-border strikes were reported over the weekend. President Trump had indicated he would meet last Friday to decide whether to approve an extension to the ceasefire; since then there has been little public update, apart from him comparing himself to Elvis. Defence Secretary Hegseth briefly re-entered the spotlight by saying the U.S. could resume attacks on Iran if a satisfactory agreement were not reached.
Reports on Monday said U.S. forces struck Iranian targets over the weekend. Iran, for its part, said it had targeted an air base that was used in what it described as a U.S. attack. Kuwaiti defences were reported to be intercepting missile and drone strikes. Against this backdrop, commercial traffic through the Strait of Hormuz is a trickle compared with pre-conflict levels - eight vessels were recorded heading outbound on May 30, of which only two were tankers. By contrast, the pre-war daily average was roughly 136 vessels.
Commodity analysts have warned for some time that global oil inventories could be so depleted by mid-June that physical shortages might materialise, putting a clock on potential supply stress. Nonetheless, Brent crude remains comfortably below the $100 mark, trading at $93.40 after a 2.5% advance on the day.
While oil markets pulse with geopolitical risk, Asian equity markets have largely ignored that noise in favour of artificial intelligence-led enthusiasm. South Korea’s main index jumped 28% in May, Taiwan’s benchmark rose 15%, and Japan’s Nikkei added 12% over the same period. The tech-led rally was stark on Monday when Samsung Electronics rallied 10% as it began shipping a new class of faster chips.
The tech surge shows up vividly in South Korea’s trade figures. Exports climbed 53% in May from a year earlier, reaching almost $88 billion. Within that total, semiconductor shipments surged 169% and exports classified as computers rose 291% year-on-year. Yet the Korean won remains close to record lows, implying that a significant share of these dollar revenues may still be held in dollars rather than being converted into local currency.
That accumulation of dollar assets likely finds its way into safe, dollar-denominated instruments such as Treasuries, which has the side effect of indirectly aiding the U.S. administration in financing a large budget deficit. In other words, the AI investment cycle abroad appears to be recycling export dollars into U.S. paper, a dynamic that affects sovereign financing and cross-border capital flows.
Attention in Taipei turns to Computex, where Nvidia’s chief executive Jensen Huang is scheduled to open the trade show with remarks on AI. He is expected to highlight the company’s newest products and outline a sizeable investment programme for Taiwan.
Key developments that could influence markets on Monday:
- EU unemployment for April
- EU purchasing managers' indices
- German retail sales
- U.S. ISM manufacturing survey for May
- U.S. PMI
The interplay of geopolitics, shrinking oil inventories and an intense technology investment cycle is creating divergent market impulses. Energy prices are being watched for signs of tightening supply, while Asian equity markets and regional exporters are riding strong demand tied to semiconductors and AI-related capital expenditure. Observers will be tracking the scheduled economic releases in Europe and the United States alongside developments in the Gulf and corporate announcements at events like Computex.