HONG KONG – Stock markets in Japan and South Korea achieved remarkable new highs on Monday, driven by optimism surrounding the artificial intelligence (AI) sector. This surge comes amid escalating tensions between the United States and Iran, as investors keenly await developments regarding the potential extension of the current ceasefire in the Iran conflict.
Oil prices saw an increase of over 3% as negotiations between the U.S. and Iran progressed, specifically concerning the reopening of the Strait of Hormuz—a critical passage for global oil and natural gas shipments. Tensions flared further when the U.S. military confirmed the bombing of Iranian military installations following Iran’s downing of an American drone.
In the U.S., futures showed a slight uptick, reflecting a broader positive sentiment. Asian markets largely advanced, with both Japan’s Nikkei and South Korea’s Kospi indices achieving record-breaking levels, buoyed predominantly by tech stocks amid a perceived growth trajectory in AI and other advanced technologies.
The Tokyo Nikkei 225 index closed 0.9% higher, marking a historic finish at 66,934.33, and briefly crossed the 67,000 threshold during trading, reaching 67,231.28. Notably, shares of SoftBank Group, heavily invested in AI ventures, soared by 14%, positioning it as Japan’s most valuable publicly traded company, surpassing automotive giant Toyota.
In South Korea, the Kospi index surged 3.7% to close at 8,788.38, also setting a record high after peaking at an intraday value of 8,874.16. Samsung Electronics, the nation’s largest firm, saw its stock rise by 10.1%. Additionally, official data released on Monday revealed a 53% year-on-year increase in South Korea’s exports for May, primarily driven by robust global semiconductor demand.
Over the past month, the Nikkei has risen more than 12%, while the Kospi has experienced an impressive surge of around 27%.
Hong Kong’s Hang Seng index traded 0.8% higher at 25,389.54, contrasting with the Shanghai Composite index, which dipped 0.3% to 4,057.74, following reports that factory activity in China softened in May amid signs of declining export demand.
Australia’s S&P/ASX 200 experienced a minor decline of less than 0.1%, ending at 8,729.40. Meanwhile, Taiwan’s Taiex rose by 1.4%, while India’s Sensex fell by 0.2%.
Three months into the Iran war, uncertainty surrounding a permanent resolution continues to influence market fluctuations and oil price volatility, even as optimism regarding AI demand and strong corporate earnings has propelled a stock market rally, including on Wall Street.
In high-level discussions last Friday, U.S. President Donald Trump and his advisers were deliberating a tentative plan to extend the Iran war ceasefire by an additional 60 days, although a final decision had not been reached. Iran, for its part, indicated that a deal was yet to be finalized. The fate of the Strait of Hormuz’s reopening remains uncertain, as it has largely remained inaccessible, with the U.S. enforcing a blockade on Iranian ports.
Compounding the situation, the Israeli military has escalated its operations in Lebanon, targeting the Iran-backed Hezbollah militant group, which further complicates the prospects for a resolution regarding the Iran war.
Brent crude oil, the global benchmark, rose 3.1% early Monday, reaching $93.95 per barrel, compared to approximately $70 per barrel in late February prior to the onset of the war. Benchmark U.S. crude also increased by 3.5%, reaching $90.39 per barrel.
“Despite ongoing retaliatory attacks, market participants continue to operate under the assumption that the Strait of Hormuz will reopen sooner rather than later,” noted Jonas Goltermann, chief markets economist at Capital Economics.
On Friday, U.S. stock indices reached new heights, propelled by major technology firms. The benchmark S&P 500 added 0.2%, marking its seventh consecutive gain to close at 7,580.06. The Dow Jones Industrial Average rose by 0.7% to reach 51,032.46, while the tech-heavy Nasdaq composite gained 0.2%, ending at 26,972.62.
Dell Technologies experienced a remarkable surge of 32.8% following strong earnings reports and an increased outlook fueled by heightened AI demand. Microsoft shares rose over 5.4%, while Broadcom gained 4.7%.
In currency markets, the U.S. dollar strengthened against the Japanese yen, trading at 159.46 yen compared to 159.25 yen previously, while the euro was valued at $1.1657, down from $1.1667.
