Asian Equities Rally on Easing Hormuz Tensions; Oil Down, Gold Up

Lead Asian markets closed higher today, extending gains from the previous US session, as geopolitical tensions surrounding the Strait of Hormuz appeared to ease. WTI crude oil fell by 0.96%, while gold futures rose by 1.75%. Session narrative Asian equities saw broad gains today, mirroring the strong performance in US markets overnight. The positive sentiment was largely driven by reports of de-escalating tensions in the Strait of Hormuz, with US officials indicating a deal with Iran is close. This development led to a decline in crude oil prices, with WTI crude down 0.96% to $75.04. Conversely, gold futures climbed 1.75% to $4225.2, and silver futures surged 2.51% to $61.76. In currency markets, the US dollar index remained flat, while USD/JPY saw a slight decline of 0.09%. Geopolitical concerns persisted in other regions, with Russia launching ballistic missile attacks on Kyiv and North Korea criticizing Japan's missile tests. Tech sector news included NVIDIA securing an exclusive deal with SpaceX and AMD reporting unexpected demand squeezing server CPU supply, though CEO Lisa Su forecasts improvement in 2027. Cross-asset check US equity futures are showing modest gains, with S&P 500 futures up 0.37% and Nasdaq futures up 0.26%. The US 10-year yield decreased by 1.26% to 4.63%. The VIX saw a 4.04% increase. In commodities, beyond crude and precious metals, natural gas futures rose 0.78% and copper futures gained 0.13%. The US Dollar Index was flat, while EUR/USD was up 0.03% and GBP/USD gained 0.03%. USD/CNH was down 0.01%. Themes & continuing stories The primary theme driving market sentiment is the easing of geopolitical tensions in the Strait of Hormuz, which has positively impacted risk assets and led to a decline in oil prices. However, geopolitical risks remain elevated in Eastern Europe, with ongoing conflict and missile attacks on Kyiv. The technology sector is also in focus, with news of NVIDIA's exclusive deal with SpaceX and AMD's server CPU supply constraints highlighting both growth opportunities and challenges within the industry. Central bank commentary continues to be monitored, with Fed's Schmid emphasizing the need for tighter policy to combat inflation. What’s ahead Market participants will be closely watching for further developments regarding the Strait of Hormuz agreement, with a potential announcement expected on Wednesday. Continued monitoring of geopolitical events in Eastern Europe and any new central bank communications will also be key. Earnings reports and economic data releases will provide additional direction in the coming sessions.