Brent crude futures slid 1.9% to $79.01 a barrel, a notable drop from the May peak of $126.41. The shift followed reports from Qatari and Pakistani officials confirming the first session of negotiations had successfully established a path forward. This diplomatic progress countered earlier threats of military escalation and concerns over the Strait of Hormuz, where shipping activity has remained volatile. Japan’s Nikkei led the regional charge with a 1.8% gain, building on last week’s record-breaking performance, while South Korean markets added 0.6% on persistent demand for semiconductor equities.
Despite the optimism in Asia, Western markets remain anchored by the Federal Reserve's hawkish trajectory. Investors are pricing in a 75% probability of a rate hike by September, pushing 2-year Treasury yields to 4.230%. JPMorgan’s Fabio Bassi noted that while the firm remains constructive on risk assets, the limited margin for error regarding inflation suggests a difficult path ahead. Meanwhile, political instability in the United Kingdom weighed on sterling, which fell to $1.3208 as reports surfaced regarding Prime Minister Keir Starmer’s potential resignation following a significant electoral defeat by rival Andy Burnham. Investors are now bracing for Thursday’s core inflation data, which is expected to reinforce the case for tighter monetary policy.
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