Asian Shares Edge Up as Oil Holds Flat Amid Doubts Over Middle East Settlement

South Korea's KOSPI jumped 2.6 per cent on Monday, its first session after a three-day holiday break, and it led a modest rise across Asian markets. Investors were taking some comfort from signs of patchy progress toward settling the Middle East conflict, at the start of a week crowded with corporate earnings and economic data.

Oil, by contrast, went nowhere. Brent crude futures sat at $108.30 a barrel, having recovered from an early drop of more than 2 per cent. US crude was steady at $102.01. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 per cent. Japan was on holiday, so trading was thin: Nikkei futures stood at 59,630, only slightly above the cash close of 59,513.

The Strait of Hormuz is the centre of the uncertainty. President Donald Trump said the United States would begin an effort on Monday morning to free ships stranded there, but he gave no details. A statement from US Central Command said the support would include guided-missile destroyers, more than 100 land and sea-based aircraft and 15,000 service members.

The diplomacy is moving in parallel. Iran said the US had answered its 14-point proposal through Pakistan and that it was reviewing the response. Trump said the response was unlikely to be acceptable. Dealers also noted that a bulk carrier had reported being attacked by multiple small craft while passing Iran's Sirik on Sunday. It was unclear how many ships would try to run the strait even with naval protection.

In Europe, EUROSTOXX 50 and DAX futures each added 0.1 per cent, while FTSE futures slipped 0.4 per cent. S&P 500 and Nasdaq futures were little changed as markets braced for more than 100 earnings reports this week, including Advanced Micro Devices, Super Micro Computer, Palantir, Walt Disney and McDonald's.

Goldman Sachs analysts said S&P 500 earnings-per-share growth was running at 25 per cent, or a still brisk 16 per cent once one-off gains were excluded. They wrote that guidance and analyst estimate revisions had stayed strong despite elevated energy prices and geopolitical uncertainty, but that the reward for beating earnings expectations had been unusually small. Concern also lingered over AI capital spending, now expected to reach $751 billion in 2026. That is $80 billion above estimates at the start of the earnings season and 83 per cent above 2025 spending.

The threat of oil-driven inflation has lifted bond yields, challenging equity valuations, and several major central banks have turned hawkish. Markets now imply just two basis points of Federal Reserve easing by year-end, down from 11 a week ago. Pricing for the European Central Bank has climbed to 76 basis points of hikes, and for the Bank of England 63 basis points.

The Reserve Bank of Australia meets on Tuesday and is considered likely to raise its cash rate for a third consecutive time as it fights stubborn inflation. In the US, Friday's April payrolls report could shift the Fed outlook. The median forecast is a rise of 60,000 jobs after March's outsized 178,000 gain, though seasonal adjustment problems make the figure uncertain.

Elsewhere, the euro was flat at $1.1723, and the pound held at $1.3575 ahead of UK local elections that could bring heavy losses for the ruling Labour Party. Gold slipped 0.2 per cent to $4,603 an ounce, well within recent ranges. The week's tests are the RBA decision, the earnings run and Friday's jobs data, all against the backdrop of Hormuz.