Equity markets in Japan and South Korea moved higher on Monday amid subdued holiday turnover after media reports indicated negotiators were discussing terms for a temporary ceasefire between the United States and Iran.
The Nikkei 225 climbed 1.4% while Japan’s broader TOPIX index increased 0.7%. In South Korea, the KOSPI rose 1.1%. Market liquidity was lighter than usual because trading in Hong Kong, mainland China and Australia was suspended for public holidays.
Sentiment improved following an Axios report that said the United States, Iran and regional intermediaries were exploring details of a possible 45-day ceasefire. The report identified Pakistani, Egyptian and Turkish intermediaries as involved in the discussions, while also noting that odds of securing even a partial agreement within the next 48 hours remained uncertain.
In Asian trading, U.S. stock futures were largely unchanged on Monday, having pared earlier losses as traders reacted to the possibility of a ceasefire.
The diplomatic developments came against a backdrop of a separate escalation in rhetoric from the White House. U.S. President Donald Trump said Iran had until Tuesday evening to reopen the Strait of Hormuz or face attacks on critical infrastructure. Trump specified the deadline would expire at 8 p.m. Eastern Time on Tuesday and warned that Iranian power plants and bridges could become targets if shipping through the strait was not restored.
Oil prices rose again in Asian trading after sharp gains late last week, but some of that upward momentum was trimmed following publication of the ceasefire discussions. The article noted that higher crude prices threaten to lift import costs for Asian economies that are heavily dependent on energy imports.
Elsewhere in the region, Singapore’s Straits Times Index was up 0.3%, while India’s Nifty 50 bucked the regional advance and slipped 0.4%.
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With Asian trading thinner because of holidays and diplomatic developments injecting fresh uncertainty, market participants will likely monitor both any progress in mediation efforts and oil-market moves closely in the coming sessions.