- Kospi falls before trimming losses as risk sentiment weakens.
- Nikkei 225 falls ~0.3% on cautious Asian market reactions.
- The US dollar index is up ~0.5% to a one-week high.
The US oil benchmark rose above 100 dollars per barrel on Monday. barrel after peace talks between the US and Iran failed to make a breakthrough and when US President Donald Trump ordered a blockade of Iranian ports.
Shortly after trading began, a barrel of West Texas Intermediate for May delivery rose about 8% to $104.50, while June delivery of international benchmark Brent rose 7% to $102.
In early Asian trade, South Korea’s benchmark Kospi index fell 2% before recovering slightly, while Japan’s Nikkei fell 0.3%.
Oil prices had slumped and stocks soared last week after Trump agreed to a two-week ceasefire brokered by Pakistan, despite its weakness quickly becoming apparent as Israel continued to attack Lebanon and the Strait of Hormuz remained effectively closed.
The dollar also strengthened to a one-week high in a broad rally against most of its peers in early Asian trade on Monday.
The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, rose as much as 0.5% to $99.187, its highest level since April 7.
The euro fell 0.5% to $1.1667 as the British pound fell 0.6% to $1.3383, while the Australian dollar was 0.8% lower at $0.7014 and the New Zealand dollar was down 0.7% at $0.5798.
US President Donald Trump said on Sunday the US Navy would begin blockading the Strait of Hormuz after marathon talks with Iran failed to reach an agreement to end the war, jeopardizing a fragile two-week ceasefire.
The U.S. Central Command said U.S. forces would begin implementing the blockade of all maritime traffic coming in and out of Iranian ports from 6 p.m. 10 ET (7:00 p.m., Pakistan Standard Time) Monday.
“Early and thin currency trading this morning shows a risk-off sentiment, with the broad-based rally in the USD in response,” Westpac analysts wrote in a research note.
