Amid concerns over the Middle East, Asia's markets rise while oil and gold decline.

 

On Monday, investors returned to riskier assets as worries over a larger Middle East conflict subsided, and Asian equities recovered some of their losses.

As the likelihood of a significant supply disruption decreased, crude oil prices dropped and gold and the safe-haven dollar pulled back from their heights.

Following an apparent Israeli drone attack inside its borders, which came after an unprecedented Iranian missile and drone attack on Israel days earlier, Iran declared on Friday that it had no plans to react.

Last week saw a 2.85% decline in MSCI's world equities index, marking the worst week since March 2023. Just 0.05% of it was up early on Monday.

In Asia, the KOSPI increased 0.82%, the Australian benchmark gained 0.92%, and the Hang Seng in Hong Kong increased by 1.94%.

Because of a strong concentration of shares in the chip industry, which followed losses in its American counterparts starting on Friday, Japan's Nikkei gained 0.56%, underperforming the rest of the region. Taiwan's stock market fell 0.05%.

Mainland In their first opportunity to respond to fresh policies unveiled on Friday that aim to encourage foreign investment in China's technology industry, Chinese blue chips fell 0.18%.

U.S. stock futures increased by 0.31% after the S&P 500 fell by 0.88% on Friday.

As prices decline, bond rates, which increase, climbed back towards multi-month highs. The 10-year U.S. Treasury yield increased 4 basis points to 4.656%, moving closer to the five-month high of 4.696% that was attained last week due to the perception that the Fed would not be rapidly easing policy in light of the strong economic data and persistent inflation.

The dollar index, which compares the value of the currency to six important rivals, decreased by 0.05% to 106.05. Last week, it reached a five-month high of 106.51.

Gold fell 0.95% to $2,367.75, retreating from last week's close to the record high of $2,431.29.

In a client note, Saxo strategist Charu Chanana stated, "Failure at $2,400 could hint towards a short-term correction... followed by an overdue period of consolidation."

Crude dropped as traders returned their attention to fundamental analysis. Brent futures dropped 67 cents, or 0.77%, to $86.62 a barrel against the backdrop of growing U.S. stockpiles. Monday is the expiration day of the front-month U.S. West Texas Intermediate (WTI) crude contract for May, which lost 63 cents, or 0.76%, to $82.51 per barrel. The more active June contract declined 64 cents to $81.58 per barrel.

"It looks on the face of it like oil's uptrend may be over, but based on technical levels, until WTI breaks below $80, the uptrend is still in place," said Nomura's Kamitani.