Asian shares gain even as US stock futures dip and oil rises after Trump's renewed threats to strike Iran

Asian markets gained even while dipped and oil prices climbed as US-Iran peace talks were clouded by a renewed threat by US President Donald Trump to strike the latter.

South Korea's Kospi was up 0.6%, while Japan's Nikkei 225 surged nearly 1.5%. Meanwhile, S&P 500 contracts declined 0.5%, while Nasdaq 100 futures were down 0.7% after Wall Street was shut on Friday on account of a holiday. Treasury yields advanced as cash trading resumed.

Brent crude rose more than 1% to trade around $81.50 a barrel. The dollar edged higher against most major peers, with the pound weakening on speculation around Keir Starmer’s future as UK prime minister.

Trump once again threatened strikes if Hezbollah keeps attacking Israel. Things got off to a confusing start Sunday when local media reported that Iran halted talks over Trump’s latest comments, but people familiar with the matter said the discussions — aimed at settling the issue of the Islamic Republic’s nuclear program and permanently reopen the Strait of Hormuz — were continuing.

The uncertainty is emerging as another test of the optimism that’s seen a tech-led rally in stocks gain further momentum after the US and Iran agreed to an interim peace deal. A gauge of global equities has rallied 15% so far this quarter despite the war, on track for its biggest quarterly surge in six years.

Traders in Asia will also be focused on China’s commercial bank lending rates on Monday as the economy shows signs of stalling. The loan prime rates are likely to remain unchanged, as buffers from strong exports and the AI boom may reduce the urgency to step up support for the economy, according to Bloomberg Economics.

Meantime, the pound slid toward a fresh low for the year as Starmer is expected to set out a timetable for his departure as PM in the coming days, and may concede power as soon as Monday, people familiar with the matter said, though they cautioned that was not certain.

Starmer spent the last three days considering his position and whether he should continue to fight attempts by Greater Manchester Mayor Andy Burnham, who was elected to Parliament last week, to depose him.

The question for investors is the impact on UK’s finances if Burnham becomes prime minister. He has so far offered little clarity on the potential policies he’d pursue, making it difficult to gauge the ramifications for future borrowing. Markets are nervous about any potential to ramp up bond sales to fund spending, given the UK is already struggling with its debt pile.

Elsewhere in markets, the yield on 10-year Treasuries jumped five basis points. Bond traders, recently forced to reposition for the possibility of higher interest rates ahead, are looking to this week’s personal spending data for an early read on whether the market’s newly hawkish stance is warranted. Meanwhile, gold held its decline after capping a third straight week of losses on Friday.

With inputs from Bloomberg