Asian equity markets opened higher on Monday, following the lead of US markets that reached new highs in the previous session. The positive momentum was driven by employment data that showed a slight decline in the jobless rate to 4.4%, while job additions came in slightly below economist forecasts.

Regional Market Performance

Equities across the Asia-Pacific region reflected the optimism from US markets. Australian and South Korean shares posted gains, while equity index futures for Hong Kong also increased. The regional markets took their cue from the S&P 500, which closed at an all-time high with a 0.6% gain on Friday. However, US equity futures edged lower during Asian trading hours.

Japanese financial markets remained closed on Monday for a holiday, which also meant no trading of cash US Treasuries in Asia during the session.

Oil Markets Advance on Geopolitical Tensions

Oil prices increased as protests in Iran intensified, raising concerns about potential supply disruptions. The advance extended gains from Friday's session, when oil capped its longest run of weekly gains since June. The unrest has raised questions about potential regime change in the Islamic Republic, which could significantly impact global geopolitics and energy markets.

Trump has threatened repercussions if demonstrators were targeted, while Tehran has warned the US and Israel against any intervention in the ongoing situation.

Technology Sector Developments

Asian technology shares were positioned for potential gains after Taiwan Semiconductor Manufacturing Co. reported revenue that exceeded estimates. The strong performance from the chipmaker provided fresh support for the artificial intelligence trade across the region.

Currency and Bond Market Movements

The dollar edged lower in Asian trading after Federal Reserve Chair Jerome Powell disclosed that the US central bank had received grand jury subpoenas from the Justice Department. Australian bond yields showed little change in early Monday trading, while the US 10-year yield ended Friday's session relatively unchanged.

Central Bank and Policy Outlook

The employment data left expectations for additional Federal Reserve interest-rate cuts intact, though questions remain about the pace of future reductions. Morgan Stanley, Barclays and Citigroup all adjusted their forecasts for Fed rate cuts later in 2026 following Friday's jobs data. Group-of-Seven finance ministers were scheduled to meet in Washington to discuss rare earths, while New York Fed President John Williams and Atlanta Fed President Raphael Bostic were set to speak.

Asian equity markets opened with broad-based gains on Monday, following strong performance in US markets where employment data helped drive stocks to new record levels. The positive sentiment carried over despite ongoing geopolitical uncertainties and mixed signals from various economic indicators.

Market Performance Across Regions

Shares in Australia and South Korea posted gains alongside equity index futures for Hong Kong, all taking guidance from Friday's strong US performance. The S&P 500 climbed 0.6% on Friday to close at an all-time high, though US equity futures edged lower in early Monday trading.

Japanese financial markets remained closed Monday for a holiday, which means no trading of cash US Treasuries occurred in Asia during the session.

US Employment Data Impact

Friday's gains in US equities followed largely benign employment data that showed slightly fewer workers were added to the economy than economists had forecast. The unemployment rate edged down to 4.4%, providing a mixed but generally supportive backdrop for markets. The jobs data left expectations for additional Fed interest-rate cuts intact, although the pace of future reductions remains uncertain.

Morgan Stanley, Barclays and Citigroup all pushed back their forecasts for Fed rate cuts later in 2026 following Friday's employment report. The US 10-year yield ended little changed in Friday's session.

Currency and Commodity Movements

The yen crept lower in early Asian trade after closing Friday at its weakest level in a year. The weakness partly reflected the potential for a snap election in Japan. The dollar remained mixed against developed-market peers on Monday.

Oil advanced in early Asian trading as Iran intensified a crackdown on protests across the country. West Texas Intermediate crude rose 0.5% to $59.41 a barrel. The increase extended Friday's advance, capping the longest run of weekly gains since June. The unrest has raised possibilities of significant geopolitical changes that could transform global energy markets.

Geopolitical Developments

Trump has threatened repercussions if demonstrators were targeted, while Tehran has warned the US and Israel against any intervention. Matt Maley, chief market strategist at Miller Tabak + Co., noted the elevated uncertainty levels: "The situation in Iran seems to be taking the country to the brink. The level of uncertainty in so many geopolitical hotspots is reaching levels not seen since the late 1930s."

Separately, the US Supreme Court failed to weigh in on Trump's tariffs, pushing into the future one risk hanging over markets. US federal prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome Powell over the central bank's renovation of its headquarters, according to the New York Times.

Technology Sector Outlook

Asian tech shares may receive support after Taiwan Semiconductor Manufacturing Co. reported revenue that topped estimates, offering fresh momentum for the AI trade in the region. This development comes as signs emerge that the dominance of US mega-cap tech stocks may be waning.

Precious metals traded slightly higher early Monday, with spot gold rising 1% to $4,554.69 an ounce, as some traders positioned for continued strength following last year's rally. Australian bond yields remained little changed, with the 10-year yield declining two basis points to 4.67%.