Asian stocks posted notable gains on Monday as investors reacted to a preliminary peace arrangement between the U.S. and Iran and to a positive close on Wall Street on Friday. Markets were also buoyed by SpaceX recording strong returns in its market debut, contributing to risk-on sentiment. In Asian trading, ESU26 rose 1.1%.
Attention this week is squarely on a sequence of central bank decisions. The Bank of Japan (BOJ) and the Reserve Bank of Australia (RBA) are scheduled to announce rate decisions on Tuesday, while the Federal Reserve is set to meet later in the week.
Regional performance and drivers
South Korea's KOSPI led gains across the region, jumping 5.6% and drawing nearer to its previous record. Mainland China benchmarks also advanced, with the Shanghai Shenzhen CSI 300 up 1.3% and the Shanghai Composite rising 0.9%. Hong Kong's Hang Seng increased 0.4%.
Other markets were higher as well: Singapore's Straits Times added 1.2%, while futures for India's Nifty 50 rose 1.7%. Australian markets moved up too, with the S&P/ASX 200 climbing 1.3%.
The U.S. and Iran said they had reached a memorandum of understanding to end hostilities and to reopen navigation through the Strait of Hormuz. The MOU is expected to be signed by Friday. The agreement calls for subsequent talks focused on Iran's nuclear activities; media reports cited in market commentary noted that U.S. military action could resume if a separate nuclear deal is not concluded.
Investors interpreted the MOU as a catalyst for an immediate easing of Middle East tensions, which translated into a sharp fall in oil prices on expectations of fewer disruptions to supply. Lower crude costs were viewed as supportive for several major Asian economies that depend heavily on oil imports via the Strait of Hormuz, notably India, Japan and South Korea.
Tokyo records and the BOJ outlook
Japanese equities rose strongly alongside their regional peers. The Nikkei 225 jumped 5.4% while the TOPIX gained 3.6%, with both indexes reaching record highs amid broad-based strength across technology and non-technology sectors.
However, the rally in Japan arrives ahead of a key test: the BOJ is widely expected to raise interest rates by 25 basis points at the end of its two-day meeting on Tuesday. The central bank has signaled the possibility of a June rate increase, citing inflationary pressures that have intensified amid the Iran conflict. Market watchers will be closely parsing the BOJ's outlook for the coming months; ANZ analysts are anticipating a largely hawkish pivot.
Beyond Japan, traders will also be watching the RBA meeting on Tuesday, where the central bank is expected to keep rates on hold.
Market breadth and closing context
Benchmark snapshots released during Asian trade showed a widespread advance: AXJO +1.35%, JP225 +5.39%, HK50 +0.4%, NSEI +1.99%, KS11 +5.63%, STI +1.22%, SSEC +0.92%, TOPX +3.62%, CSI300 +1.47%. The strong risk appetite reflected both geopolitical relief and momentum from global equities.
Investors will enter the remainder of the week with focus split between the immediate implications of the U.S.-Iran MOU and the outcomes of several central bank meetings that could reshape rates expectations across the region.