Asian trading opened with a mix of gains and losses on Monday as markets reacted to a stark warning from U.S. President Donald Trump and unsettled liquidity conditions across the region. Trump said the Strait of Hormuz must be reopened by Tuesday or the United States would target Iranian civilian infrastructure, comments that heightened concerns about potential reciprocal strikes and renewed disruption to Gulf energy flows.
Oil led the risk-sensitive moves, with Brent crude futures rising 1.4% to $110.58 a barrel at the start of the session after OPEC+ ministers agreed to raise output quotas by 206,000 barrels per day for May. Market participants cautioned, however, that for several major producers located behind the Strait of Hormuz the nominal quota increase may not translate into incremental supply in the near term because those countries have sustained damage to production facilities and transport infrastructure since the war began.
Fixed income markets saw selling pressure. The yield on the U.S. 10-year Treasury climbed 4.7 basis points to 4.3584%. In Japan, the yield on the government bond reached 2.4%, up 2.0 basis points and marking the highest level for that paper since February 1999. Currency movements were relatively subdued; the U.S. dollar index held around 100.23, while the dollar was flat against the yen at 159.635.
Equities displayed divergent performance across the region. S&P 500 e-mini futures sank 0.2% as risk-off sentiment lingered in U.S.-linked contracts, yet MSCI’s broad index tracking Asia-Pacific shares outside Japan edged up 0.5%. Japan’s benchmark Nikkei 225 rose 1.2%, and South Korea’s Kospi advanced 2.0% at the open.
Market participants also pointed to thin trading conditions as a complicating factor for price moves, with many countries in the region observing public holidays on Monday. The reduced liquidity amplified the market response to geopolitical headlines and left traders sensitive to the prospect of retaliatory strikes by Iran on Gulf state targets.
Observers say the Middle East situation will remain the primary focus for markets this week, but attention will be shared with a heavy schedule of U.S. economic releases. Yardeni Research president and chief investment strategist Ed Yardeni noted that developments in the Middle East will dominate, even as a packed data calendar - including the Federal Open Market Committee March minutes, February personal income figures, and the March consumer price index - competes for investor attention.
In a research note, Yardeni wrote that Trump warned Iran that unless the Strait is opened immediately, Monday would be Obliteration Day, when the U.S. will bomb Iran’s electric power plants.
U.S. labor market data released last week added another layer to market positioning. The S&P 500 finished Friday up 0.1% after the U.S. jobs report showed nonfarm payrolls increased by 178,000 in March, the largest monthly rise in over a year. The unemployment rate fell to 4.3% from 4.4%, with the drop partly reflecting people exiting the labor force.
Those employment figures complicate the Federal Reserve’s deliberations ahead of its next policy decision at the two-day meeting ending April 29. Market-implied pricing in swaps, as tracked by the CME Group’s FedWatch tool, currently indicates traders do not expect the central bank to make policy moves until September 2027.
On the commodities and digital assets front, gold prices slid 0.8% to $4,638.54. Bitcoin rose 1.9% to $68,915.85, while ether climbed 2.4% to $2,117.61, reflecting selective flows into crypto amid broader risk re-pricing.
As the week progresses, market participants are likely to monitor both geopolitical developments around the Strait of Hormuz and the stream of U.S. data that could influence expectations for monetary policy. Thin liquidity and headline risk mean intraday volatility could remain elevated across asset classes.