Asia Market Quick Take – 26 May, 2026

Key points:

• Macro: Trump reports progress on Iran ceasefire-Strait deal; Tehran denies imminent agreement
• Equities: Asia and Europe shares gained on Iran deal hopes; Huawei-fuelled Chinese chip optimism
• FX: Overnight FX muted; dollar softens on Iran deal optimism and cheaper oil
• Commodities: WTI remains under selling pressure
• Fixed income: US 5y–30y yield curve narrows to 80 bps, tightest since May 2025

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Disclaimer: Past performance does not indicate future performance.

Macro:

• President Trump says talks with Iran on an interim deal to prolong a ceasefire and reopen the Strait of Hormuz are progressing, though Iran’s Foreign Ministry insists no agreement is close, and Trump has also said enriched uranium should preferably be destroyed in Iran.
• Iran is reportedly seeking guarantees from China before proceeding, even as US and Israeli aircraft are said to have struck Iranian vessels near Larak Island and Israel signals it will step up attacks on Hezbollah.
• In Japan, Prime Minister Takaichi plans to fund an extra budget without increasing bond issuance on a calendar-year basis, while a former major trading-house chief warns of a possible shortage of naphtha-derived chemicals by late June.
• China's financial liquidity is expected to shift to a more balanced but still accommodative level from ultra-loose conditions, partly thanks to the central bank's supportive stance.

Equities: 

• US: US equity futures held gains compared to Monday's session but remained sharply higher from Friday's settlement, supported by ongoing optimism that US-Iran diplomatic talks are progressing.
• EU: European shares advanced on Monday as oil declined, with the US and Iran inching toward a deal to end the nearly-three-month war. The Euro Stoxx 50 rose 2% to erase its losses since the start of the Iran war at the end of February. The Stoxx 600 Index advanced 1%, notching its sixth consecutive trading day of gains and the best streak since October. Italy's FTSE MIB Index rose as much as 1.2% to hit 50,121.2 points, surpassing its all-time closing high set 26 years ago in 2000. Germany's DAX rose 2%, or 500.54 points to 25,389.10, the biggest move since rising 2.1% on May 6. France's CAC 40 ended 1.76% higher at 8,258.26.
• Asia: Asian stocks were poised to extend gains as optimism over a potential US-Iran deal to reopen the Strait of Hormuz lifted risk appetite and sent oil prices lower. South Korea's KOSPI index jumped 3.2% to hit an intraday record, opening 2.8% higher at 8,070.91 and rising to 8,089.61. The Nikkei Stock Average opened 0.1% higher at 65,247.24, led by electronics stocks. Hong Kong and South Korean equity markets reopened after a holiday. Australia's S&P/ASX 200 fell 0.1%, with ASX Ltd. falling 5.2%, the most in five months, after the company announced FY27 expenses growth of 18%-21% over tech modernization. Singapore's Straits Times Index gained 0.02% on May 21 to finish at 5,045.71. Chinese chip stocks climbed on optimism over Huawei's touted breakthrough in making advanced chips, possibly having 1.4nm processes in 5 years without cutting-edge equipment.

Earnings this week:

• Tuesday: Xiaomi, Zscaler,
• Wednesday: Kuaishou, CSPC Pharmaceutical, Kingsoft, Scotiabank, HP, Salesforce, Snowflake, Marvell Technology, PDD Holdings, Synopsys
• Thursday: Li Auto, Costco, Best Buy, Okta, Royal Bank of Canada

FX:

• Overnight FX moves were modest, with broad USD weakness driven by optimism over a potential US–Iran deal and lower oil prices and pushing the DXY down 0.22% to 99.02.
• USDJPY was steady around 158.9 despite the softer dollar and cheaper oil, showing little safe-haven demand.
• EUR and GBP slipped slightly against the dollar, EURUSD to about 1.1640, GBPUSD to 1.3490, with moves largely range-bound and driven more by lower European yields and general sentiment than by domestic news.
• AUDUSD eased to 0.7160, with traders still eyeing a potential break above 0.72 but facing a mild drag from lower oil and commodity prices.
• CNH was almost unchanged near 6.786, supported by the PBOC’s loose liquidity stance and with 6.7820 seen as key support, while the USDSGD softened marginally to about 1.278 per USD.

Commodities:

• WTI crude held just above $90.60 a barrel in overnight trading, down sharply from Friday's close despite Iranian media reports of explosions around the Strait of Hormuz. Front-month WTI crude oil futures fell 5.9% to $90.88 per barrel on Monday. Brent crude dropped more than 7% on Monday, falling 5.2% to $94.95 a barrel, as optimism grew over a potential US-Iran deal to reopen the Strait of Hormuz.
• Spot gold rose 1.4% while spot silver gained 3.5% on Monday.
• Aluminium is outpacing copper this year as the closure of the Strait of Hormuz reduces supplies, with both metals likely to extend gains along with other base metals as the impact of the Iran war combines with surging demand fuelled by the AI boom for electricity.

Fixed income:

• Treasuries rallied across the curve on Iran deal speculation. Treasury 10-year note futures gained 21/32 to 109 29/32, implying a drop of 10 basis points in cash yields as Treasury cash trading was set to resume following a three-day weekend.
• The spread between five-year and 30-year Treasury yields has narrowed to about 81 basis points, the lowest since May 2025, driven mainly by a selloff in shorter-dated Treasuries as traders ramp up bets the Federal Reserve may keep interest rates higher for longer under new chairman Kevin Warsh.
• European government bond yields fell across the curve on Monday, with Italy's 10-year yield falling 12.4 basis points to 3.645%, Germany's 10-year yield falling 10.5 basis points to 2.933%, and France's 10-year yield falling 11.8 basis points to 3.547%.

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