Asian equity markets opened with broad-based gains on Monday, taking direction from strong US performance where major indices reached new highs. The positive momentum comes amid a complex backdrop of geopolitical tensions and monetary policy considerations affecting global markets.

US Market Performance Drives Asian Gains

Shares in Australia and South Korea, along with equity index futures for Hong Kong, all posted gains following Friday's strong US session. The S&P 500 climbed 0.6% to close at an all-time high, supported by employment data that showed a mixed but largely benign picture of the US labor market.

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

Oil Prices Rise on Iran Protest Concerns

Oil markets advanced Monday as protests across Iran intensified, extending Friday's gains and capping the longest run of weekly advances since June. The unrest has raised concerns about potential regime change in the Islamic Republic, which could significantly impact global geopolitics and energy markets.

The situation has drawn international attention, with Trump threatening repercussions if demonstrators were targeted, while Tehran warned the US and Israel against intervention. Market strategists noted the elevated uncertainty across multiple geopolitical hotspots.

Currency and Bond Market Movements

The dollar weakened in Asian trading after Federal Reserve Chair Jerome Powell disclosed that the central bank had received grand jury subpoenas from the Justice Department related to his June congressional testimony on Fed headquarters renovations. This development added to market uncertainty regarding US monetary policy direction.

Australian bond yields showed little change in early Monday trading. The US 10-year yield ended Friday's session relatively unchanged, with employment data leaving expectations for additional Fed interest rate cuts intact, though the pace of future reductions remains uncertain.

Technology Sector Developments

Asian technology shares may receive support after Taiwan Semiconductor Manufacturing Co. reported revenue that exceeded estimates late last week. The strong performance offers fresh momentum for the artificial intelligence trade across the region.

Market Outlook and Policy Developments

Several major financial institutions, including Morgan Stanley, Barclays, and Citigroup, adjusted their forecasts for Fed rate cuts later in 2026 following Friday's employment data. The revisions reflect evolving expectations about the central bank's monetary policy trajectory.

Upcoming events include a Group-of-Seven finance ministers meeting in Washington to discuss rare earths Monday, along with scheduled speeches from New York Fed President John Williams and Atlanta Fed President Raphael Bostic. Precious metals traded slightly higher in early Monday sessions as some traders positioned for continued gold price strength following last year's rally.

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.