Asia Stocks Count On AI Boom To Offset Gulf Risks

Asian stock markets rose on Monday as the excitement around AI kept demand strong, making up for slow progress in Gulf peace talks that hurt hopes for reopening the Strait of Hormuz and pushed oil prices higher. Negotiators from Washington and Tehran are still trying to reach a deal, but President Donald Trump hasn’t commented on their progress.

On Saturday, Defense Secretary Pete Hegseth said the US was ready to attack Iran again if no deal is made. Tensions grew as Israel moved further into Lebanon to fight the Iranian-backed Hezbollah group.

Michael Feroli, head of US economics at JPMorgan, said, “While there are still uncertainties, the worst risk for the global economy should be over if tankers can start moving again.”

He added that oil prices

will probably stay high for a while as supplies are rebuilt and Middle East infrastructure is fixed. Brent oil rose 1.9% to $92.89 a barrel, and U.S. crude went up 2.4% to $89.46.

Asian stocks are supported by strong demand for semiconductors and AI products, with Japan’s Nikkei up another 0.5% after rising nearly 5% last week to record highs. South Korea climbed 1.3% after jumping 8% last week, and Taiwan was up almost 6%. MSCI’s main Asia-Pacific index outside Japan added 0.2%.

Nvidia CEO Jensen Huang will open the Computex trade show in Taiwan on Monday with a speech about AI, where he’ll talk about new products and Taiwan’s key role in the industry. COUNTDOWN TO PAYROLLS. In Europe, EUROSTOXX 50 futures fell 0.3%, DAX futures dropped 0.2%, and FTSE futures lost 0.5%. S&P 500 futures rose 0.2%, and Nasdaq futures gained 0.4% after hitting records last week. However, most gains are from the top 10 AI-related companies, which make up 40% of the S&P 500, and only 21 out of 500 stocks reached new highs.

Tech stocks rose almost 16% in May, while consumer and healthcare stocks grew just over 2%, and consumer staples fell more than 3%. Rising oil prices are still hurting bond markets, with U.S. 10-year yields up 3 basis points to 4.470%. Markets see a 50-50 chance the Federal Reserve will raise rates by the end of the year to stop inflation from rising.

Several Fed officials will speak this week, and important data includes the ISM manufacturing survey and the May jobs report on Friday. The market expects a solid increase of 85,000 jobs, keeping unemployment at 4.3%. A stronger result could make a rate hike more likely. The market’s cautious view has kept the dollar steady, while the yen and euro are weaker because those regions rely on energy imports.

The dollar was slightly stronger against the yen at 159.42, but traders are careful about pushing past 160.00 in case Japan intervenes. The euro was at $1.1645, staying between $1.1585 and $1.1661 last week. In commodities, gold was steady at $4,535 an ounce, with little support as a safe haven or inflation hedge.