Oil Prices Cool, Asian Markets Rally

Asian stock markets rallied in unison, buoyed by a decline in oil prices amid a weekend lull in fighting between the United States and Iran. Market participants are also bracing for a busy week filled with earnings reports from mega-cap companies and a Federal Reserve meeting.

Japan’s Nikkei 225 index rose 0.24%, while the Topix gained 0.60%. South Korea’s Kospi index climbed 0.44%. The small-cap Kosdaq index surged 1.49%, and Australia’s benchmark S&P/ASX 200 index advanced 0.97%.

Oil prices slumped after Iran indicated it would halt attacks provided the US also refrains from further military action, following an escalation in hostilities over nearly two weeks. International benchmark Brent crude futures fell more than 5% to around US$92 per barrel. US West Texas Intermediate (WTI) crude futures dropped 5% to approximately US$85 per barrel.

Tensions flared elsewhere, however, after Ukraine attacked an Iranian commercial vessel in the Caspian Sea, prompting Tehran to accuse Kyiv of hostile and criminal acts.

The Federal Reserve is set to announce its latest interest rate decision on Wednesday. The general consensus is that the central bank will raise rates in September, but markets are pricing in a significant possibility that the Fed could hike its benchmark rate by a quarter percentage point as early as this week.