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%.

Asian equity markets opened with modest gains as investors positioned themselves ahead of crucial US economic data and a potential Supreme Court ruling on tariffs. The uptick followed the region's first two-day decline of the year, signaling cautious optimism among market participants.

Regional Market Performance

Equity markets showed mixed performance across the Asia-Pacific region during the opening session. Japan and Australia posted gains, reflecting renewed investor confidence, while South Korea's market lagged behind regional peers. The modest recovery comes as global investors reassess their positions following recent market volatility.

US Market Dynamics and Sector Rotation

The S&P 500 experienced a flat trading session on Thursday, which masked significant selling pressure in major technology companies, including Nvidia Corp. This performance highlighted an ongoing defensive shift in market sentiment, with investors rotating capital away from richly valued technology giants toward smaller companies.

This rotation has tempered the artificial intelligence-led gains that characterized recent years, as investors adopt a more cautious approach to high-growth technology investments.

Key Economic Data and Policy Decisions

Investors are closely monitoring two critical developments set for Friday. The US payrolls report represents a key economic indicator that will influence Federal Reserve policy decisions regarding interest rates.

Simultaneously, the Supreme Court is poised to decide the fate of tariffs, with hundreds of companies already positioning to recoup their share of billions of dollars in duties paid.

Broader Market Movements

Treasury futures gained ground while mortgage-backed securities rallied following announcements regarding a ₹16,400 crore ($200 billion) mortgage bond purchase program aimed at reducing housing costs. The dollar maintained its gains from the previous session, while oil prices extended their advance as investors monitored developments in Venezuela and Iran.

Precious metals showed mixed performance, with silver retreating from its recent record highs while gold remained steady. Home-lender stocks rallied alongside mortgage bonds, reflecting positive sentiment around housing market support measures.

Asian Economic Data Calendar

Several important economic releases are scheduled across Asia, including inflation and producer price data from China, consumer confidence figures from Indonesia, and industrial production numbers from Malaysia. These indicators will provide insights into regional economic health and policy directions.

Market attention also remains focused on trade relations between China and Japan. China clarified that export controls on dual-use items to Japan will not impact civilian applications, stating that parties engaged in normal civilian trade "have absolutely no need to worry."