Asian markets posted modest gains Monday despite escalating Middle East tensions, as traders navigated thin holiday liquidity while oil surged past $110 per barrel ahead of President Trump’s ultimatum to Iran over the Strait of Hormuz.
Japan’s Nikkei 225 closed out the day 0.75% higher, extending earlier gains as the benchmark climbed back above the 53,000 level after sharp selloffs in March. The broader Topix index rose 0.19%, with technology and export-oriented manufacturers leading the advance. South Korea’s blue-chip Kospi gained 1.3 percent, though the Kosdaq fell 1.59%, reflecting continued caution among retail investors toward higher-risk segments.
India’s Nifty 50 bucked the regional trend, slipping 0.13% half way through the session, as energy-importing concerns weighed on sentiment in Mumbai. Meanwhile, Aussie markets, aswell as those in New Zealand, Hong Kong, mainland China, and Taiwan remained closed for Easter and Qingming Festival holidays, significantly reducing regional trading volumes.
Brent crude extended its rally to trade around $111 per barrel, up approximately 1.5 percent on the session, after President Trump issued fresh threats over the weekend to strike Iranian power plants and civilian infrastructure if Tehran fails to fully reopen the Strait of Hormuz by Tuesday at 8:00 p.m. Eastern Time.
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OPEC and its allies announced Sunday a production quota increase of 206,000 barrels per day for May, though the move may not have much impact until the Strait of Hormuz is fully active. War-related disruptions and security risks mean several member countries cannot physically deliver additional volumes, leaving the decision with minimal practical impact on global supply
The Strait of Hormuz, which typically handles roughly one-fifth of global oil flows, has been severely disrupted since a regional war escalated on February 28. Iran has rejected Trump’s ultimatum, stating the critical waterway will only reopen after war damage is compensated. Tehran has continued strikes on economic targets across the Gulf region, including a drone attack that engulfed Kuwait Petroleum Corporation’s headquarters in flames over the weekend.
Trump announced plans for a press conference “with the Military” at the Oval Office at 1:00 p.m. Monday, creating what markets are treating as a binary risk event ahead of Tuesday’s deadline. The White House confirmed the Tuesday evening timeframe represents a new deadline for Iran to reach an agreement with the United States.
In an expletive-laden social media post Sunday, Trump vowed to bring “Hell” to Iran following the rescue of a U.S. airman in Iranian territory last week. The escalating rhetoric has sent shockwaves through energy markets and revived inflation concerns that had been moderating in recent months. U.S. gasoline prices have jumped roughly $1 per gallon since the conflict intensified, with economists expecting the March consumer price index to reflect the surge when data is released later this month.
Today’s tentative gains in Japan and South Korea reflect markets that appear caught between hope for diplomatic resolution and fear of imminent military escalation. The combination of record oil prices, revived inflation concerns, and binary geopolitical risk ahead of Tuesday’s deadline leaves Asian equities vulnerable to sharp reversals, even as some traders bet that public messaging may prove more extreme than what eventually transpires. This could be an important week, particularly if there is some movement in the Strait.
