Trump-Iran Optimism Boosts Asian Stocks as US Inflation Persists

Asian equities rose Monday after U.S. officials issued optimistic messages about a potential memorandum with Iran, while persistent U.S. inflation and elevated Treasury yields kept markets cautious on monetary policy.

Tokyo led regional gains, with the Nikkei jumping about 3% to a record intraday high before easing. South Korea’s KOSPI and Hong Kong’s Hang Seng also traded higher. Singapore reported first-quarter GDP growth of 6.0% year-on-year, above estimates.

Brent crude fell below $100 a barrel as the geopolitical risk premium eased on the diplomatic signals. Independent energy analysts warned global oil inventories could reach critical lows by June and projected crude could surge above $150 a barrel if disruptions in the Strait of Hormuz continue.

U.S. inflation measures remain elevated. Headline CPI recently rose to 3.8% and core PCE inflation is forecast to edge up to about 3.3%. Futures markets have moved away from bets on multiple rate cuts in 2026 and began pricing a chance of Fed tightening by December 2026. Long-dated Treasury yields are near levels last seen in 2007, with the 30-year yield close to 5%.

Currency moves reflected reduced demand for safe-haven dollars. The dollar dipped while the Australian dollar, the pound and the euro strengthened. Spot gold rose roughly 1.3% on the session and closed near short-term resistance.

Policy developments in Japan added to market flows. Prime Minister Takaichi announced the government will finance its extra budget without increasing bond issuance on a calendar basis; the supplementary package is just over 3 trillion yen and is expected to include energy subsidies and be submitted to parliament. Bank of Japan Deputy Governor Himino, in testimony to the Diet, restated the central bank’s intention to continue raising rates and noted the timing of further hikes will depend on Middle East developments that affect growth and inflation.

Market participants also noted potential strains on primary market liquidity from large capital demands in the private sector, including a reported $75 billion capital call tied to a major space company and a confidential draft IPO filing from a large AI firm.

Technical indicators in Hong Kong showed a short-term support level around 25,267 on Hang Seng futures, with a move above about 25,850 cited as a trigger for further upside toward interim resistance near 26,080 and 26,210. A close below the support level would expose lower measures around 24,890 and 24,606.

U.S. and U.K. markets were closed for Memorial Day. U.S. stock futures pointed higher as investors awaited further diplomatic details on the U.S.-Iran memorandum and upcoming U.S. inflation data. Regional data to watch this week include Japan’s leading index and Singapore’s industrial production figures.