Shares in Asia saw a positive trend on Monday, following impressive gains in U.S. markets that were buoyed by robust earnings reports from major corporations. While U.S. futures displayed a mixed bag, oil prices experienced a slight decline after President Donald Trump announced a plan to assist ships navigating the Strait of Hormuz starting Monday. This initiative was met with disapproval from Iran, although Trump remained optimistic about the potential for dialogue leading to constructive results.
The price of West Texas Intermediate crude fell by 77 cents, settling at $101.17 per barrel, while Brent crude dropped 67 cents to $107.50. The situation in the oil market remains precarious, with ongoing tensions related to the conflict with Iran, which has disrupted shipping routes in the vital Strait of Hormuz. Stephen Innes from SPI Asset Management emphasized that the market remains at a standstill due to storage constraints, forcing producers to reduce output.
Trump described the operation, dubbed “Project Freedom,” as commencing Monday morning in the Middle East. The U.S. Central Command outlined that the operation would feature guided-missile destroyers, over 100 aircraft, and a deployment of 15,000 military personnel, although specifics on their deployment were not provided by the Pentagon.
In the Asian markets, Hong Kong’s Hang Seng Index rose by 1.5%, closing at 26,173.95. However, markets in mainland China and Japan were inactive due to the ongoing “Golden Week” holidays. Meanwhile, Australia’s S&P/ASX 200 index saw a slight decrease of 0.5%, landing at 8,690.60. Conversely, strong purchasing in technology stocks propelled South Korea’s Kospi up by 4.7% to 6,906.36, with Samsung Electronics witnessing a notable 4.8% increase in shares. Taiwan’s market also thrived, with the Taiex climbing 4.6% thanks to a 6.6% spike in shares of computer chipmaker TSMC. India’s Sensex rose by 0.9%.
On the U.S. front, the S&P 500 achieved another all-time high of 7,230.12, reflecting a 0.3% increase and marking its fifth consecutive week of gains. The Dow Jones Industrial Average, however, experienced a minor dip of 0.3%, closing at 49,499.27, while the Nasdaq composite rose by 0.9% to finish at a record 25,114.44. Apple played a crucial role in this rally, posting better-than-expected profits that contributed to a 3.3% rise in its shares.
As approximately one-quarter of S&P 500 companies have reported earnings, an impressive 84% exceeded analysts’ projections, according to FactSet. This has put the index on track for an estimated 15% growth in profit compared to the previous year. However, concerns linger regarding the trajectory of oil prices in light of the Iranian conflict. Prices surged last week due to fears that prolonged hostilities might hinder the movement of oil tankers from the Gulf, affecting global supply.
Before the conflict, Brent crude was trading at just above $70 per barrel. The surge in prices has undeniably influenced profitability among the largest U.S. oil firms, exceeding expectations during the latest earnings quarter. Nevertheless, stock prices for both Exxon Mobil and Chevron fell by 1% and 1.4%, respectively, despite reporting strong quarterly profits and declines in net income compared to the previous year.
In early Monday trading, the dollar slightly appreciated against the yen, moving to 156.79 from the previous session’s 156.80 yen. Conversely, the euro weakened to $1.1732 from a prior rate of $1.1746. The overall economic outlook remains fragile, heavily influenced by fluctuating oil prices linked to the ongoing geopolitical tensions.
