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[MARKET ANALYSIS] Mixed start to Asia-Pac trade amid higher oil prices, hawkish rate bets and after Trump rejected Iran's proposal but expects talks to resume this week

Session-wrap headlines of this kind are composites, and the useful exercise is separating the threads that historically behave differently.

Newsquawk StaffPublished On the live feed at , 20 minutes before this page
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[MARKET ANALYSIS] Mixed start to Asia-Pac trade amid higher oil prices, hawkish rate bets and after Trump rejected Iran's proposal but expects talks to resume this week

[MARKET ANALYSIS] DXY ekes marginal gains amid higher oil prices and Fed rate hike bets

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APAC Stocks: Mixed

  • Asia-Pac stocks begin the week mixed as higher oil prices spur hawkish rate bets following mixed geopolitical headlines over the weekend, as US President Trump rejected Iran's proposal for a peace deal to reopen the Strait of Hormuz, but expects talks to resume this week.

ASX 200: +0.5%

  • Trades higher with gains led by strength in the top-weighted financial sector, but with upside capped heading into a widely anticipated rate hike by the RBA tomorrow.

Nikkei 225: Flat

  • Swung between gains and losses with early gains wiped out amid higher yields and with participants also digesting firmer-than-expected Services PPI data from Japan, while former BoJ official Momma touted the possibility of the central bank hiking rates again in October.

KOSPI -2.3%

  • Suffered on return from a 4-day closure with heavy selling pressure seen in the local tech behemoths.

Hang Seng & Shanghai Comp: Hang Seng +0.5% / Shanghai Comp -1.8%

  • Chinese markets are mixed as the Hong Kong benchmark mildly gains, while the mainland is heavily pressured at the start of a holiday-shortened trading week following a slowdown in Industrial Profits, while PBoC liquidity efforts and news that the US and China agreed to a USD 30bln reciprocal tariff reduction framework failed to spur risk appetite.

US Equity Futures: Lower

  • Gradually retreated with Nasdaq futures leading the downside amid the upside in oil and yields.

European Equity Futures +0.3%

  • Indicate a positive cash market open with Euro Stoxx 50 futures up 0.3% after the cash market closed with gains of 0.5% on Friday.
Context

The dominant one here is the oil-led hawkish impulse: episodes where crude strength feeds rate repricing tend to hit duration and high-multiple tech first, which is the established pattern behind heavy selling in KOSPI names and Nasdaq futures underperforming, while financials benefit at the margin from higher yields, consistent with the ASX being led by its banks ahead of an anticipated RBA hike. The Hormuz thread follows a familiar negotiation sequence in which rejected proposals followed by expected resumption of talks have tended to keep a risk premium in crude and freight or insurance costs rather than resolve it, with the oil bid fading historically on confirmed de-escalation rather than on rhetoric. The Japan leg is the standard BoJ normalization dynamic: firmer services PPI and commentary from former officials nudging October hike expectations lift yields and cap the Nikkei without breaking it. China mainland weakness on soft industrial profits despite PBoC liquidity and a tariff-reduction framework fits the recurring pattern where easing gestures fail to offset a deteriorating earnings signal in a holiday-thinned tape. Worth noting is whether the US-Iran talks actually resume this week and how the RBA decision lands against the hike already priced, as those are the two near-term catalysts the wrap is positioning around.

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