Asia report: Markets mixed on Hormuz concerns, wave of data

(Sharecast News) - Asia-Pacific markets were mixed on Monday, with South Korea's Kospi hitting a fresh record high, as investors monitored lingering uncertainty around US-Iran negotiations after president Donald Trump said he was in "no hurry" to reach a deal to end the conflict.

"Markets are treating the lack of new Gulf headlines as a positive, but the underlying logistics are still far from normal," said Patrick Munnelly, market strategy partner at TickMill.

"Trump had signalled that he would decide last Friday whether to extend the ceasefire, yet the weekend brought no clear announcement beyond political theatre and scattered military warnings."

Trump said in an interview with Lara Trump on Fox News on Saturday that Washington and Tehran had still not finalised an agreement, adding that he was pressing for a deal to ensure Iran never acquires a nuclear weapon.

While he said he would prefer a swift resolution, he warned that military action could resume if talks collapsed.

"I'd like to say I'm in a hurry because gasoline prices are going to come tumbling down, but if you're going to be in a hurry, you're not going to make a good deal," Trump said.

"And slowly but surely we're getting, I think, what we want, and if we don't get what we want we're going to end it a different way."

Munnelly said "diplomatic silence is not the same as de-escalation," noting that defense secretary Pete Hegseth had said the US could resume attacks if no satisfactory agreement was reached, while reports suggested US forces had hit Iranian sites over the weekend.

"The Strait of Hormuz remains the key reality check," he said.

"Shipping traffic is still extremely thin, with only eight vessels leaving on 30 May, including just two tankers, compared with a pre-conflict daily average of around 136 vessels.

"That matters more than the tone of political briefings."

The caution came after US equities closed at record highs on Friday, while crude prices slipped, helping the major averages score a winning month as technology stocks led gains.

Oil prices rose on Monday, with Brent crude futures last up 3.12% on ICE at $93.96 per barrel, and the NYMEX quote for West Texas Intermediate gaining 3.62% to $90.52.

Munnelly said commodity analysts were warning that by mid-June global oil inventories could fall to levels where actual shortages emerge, "making time the critical variable".

"Yet Brent remains below $100 per barrel, trading around $93.40 even after a 2.5% rise today," he said.

"For now, markets are assigning value to the possibility of a deal, but the physical market is still signalling severe disruption."

Equities mixed on tidal wave of regional data

Japan's Nikkei 225 rose 0.91% to 66,934.33, while the broader Topix fell 0.42% to 3,940.70.

SoftBank Group surged 14.02% after the conglomerate announced plans to invest €45bn, or $53bn, over the next five years to build artificial intelligence infrastructure in France.

Kioxia Holdings gained 10.1%, while Sumco Corporation added 9.46%.

"Equities, meanwhile, are focused on AI," Munnelly said.

"Asian markets have continued to ride the tech boom, with Korea's main index up 28% in May, Taiwan up 15% and Japan's Nikkei up 12%."

Japanese companies' spending on plant and equipment was unchanged from a year earlier in the first quarter, reversing from a 6.5% increase in the previous quarter and ending a four-quarter growth streak.

Manufacturing capital expenditure fell 0.4%, weighed down by lower spending in chemicals, fabricated metals, business-oriented machinery, information and communication, and transport equipment.

Non-manufacturing investment edged up 0.3%, supported by gains in wholesale and retail trade, goods rental and leasing, information and communication, transport and postal activities, and electricity production, transmission and distribution.

In China, the Shanghai Composite fell 0.27% to 4,057.74, while the Shenzhen Component dropped 1.51% to 15,340.36.

China Reform Culture Holdings plunged 44.57%, Beijing Jingneng Power lost 10.02%, and Chongqing Zaisheng Technology declined 10.01%.

The RatingDog China manufacturing PMI eased to 51.8 in May from 52.2 in April, but remained above forecasts for 51.4.

New orders and output stayed robust but moderated, supported by domestic demand, new customers and product upgrades, while export orders dipped slightly.

Production remained strong, employment edged into marginal contraction, and supplier delivery times lengthened for a third month.

Inflationary pressures eased, with input and output price increases slowing for the first time in six and seven months respectively, though costs remained elevated due to raw materials, energy and supply disruptions.

China's official NBS manufacturing PMI edged down to 50.0 from 50.3, in line with forecasts and indicating activity stalled after April's modest expansion.

Hong Kong's Hang Seng Index rose 0.86% to 25,398.18.

Laopu Gold gained 7.74%, Meituan rose 6.54%, and Orient Overseas International added 5.88%.

South Korea led regional gains, with the Kospi 100 jumping 4.38% to 10,960.52 as the wider Kospi reached a record high.

Doosan Robotics surged 29.95%, LG Electronics rose 29.86%, and Samsung SDS gained 21.07%.

Samsung Electronics climbed more than 3%, reaching an all-time high.

Munnelly said Samsung Electronics rose 10% on Monday as it began shipping a new line of faster chips, while Computex in Taipei would keep the AI narrative in focus.

"With global investors still willing to pay for AI infrastructure exposure, the equity market can look through Gulf uncertainty as long as oil stays below the psychological $100 threshold," he added.

South Korea's exports rose 53.2% year on year to a record $87.8bn in May, beating forecasts for 48.4% growth and accelerating from a 48% rise in April.

Exports exceeded $80bn for a third consecutive month, led by semiconductor shipments, which surged to a record $37.2bn.

The S&P Global South Korea manufacturing PMI rose to 54.8 from 53.6, marking the strongest expansion since March 2021, as output and new orders grew at their fastest pace in around five years.

Employment increased at the fastest pace since March 2013, while delivery times lengthened amid raw material shortages and Middle East war-related disruptions.

Input cost inflation remained near April's record high, driven by raw materials, oil prices and a weaker currency, while selling-price inflation stayed among the highest in the survey's history.

"Korea's trade data show just how powerful the AI cycle has become," Munnelly said.

"Exports rose 53% year-on-year in May to nearly $88bn, with semiconductor exports up 169% and computer exports up 291%.

"That is not just an equity story; it is a macro story."

Munnelly said the Korean won remaining near all-time lows suggested much of the country's dollar earnings were not being recycled back into the domestic currency.

"If a significant share stays in dollars or goes into Treasuries, the AI export boom indirectly helps finance the US deficit," he said.

"That is a useful reminder that the AI trade is not only lifting stocks - it is also reshaping global capital flows."

Sydney closes just below the waterline

Turning down under, Australia's S&P/ASX 200 was almost flat, slipping 0.03% to 8,729.40.

DroneShield fell 8.55%, Resmed lost 7.58%, and Lend Lease Group declined 5.51%.

New Zealand markets were closed for the King's Birthday holiday.

Dollar mixed against regional peers

In currencies, the dollar rose 0.13% on the yen to trade at JPY 159.47 as it gained 0.14% against the Aussie to AUD 1.3939, while it fell 0.9% on the Kiwi to NZD 1.6699.

"Markets are leaning into a 'no news is good news' interpretation of Gulf diplomacy, but shipping flows suggest the physical shock is not over," Munnelly said.

"AI is powerful enough to keep Asian equities surging, and falling headline inflation in Europe may soothe nerves temporarily.

"But if Hormuz traffic does not normalise before inventories tighten, oil could quickly reclaim the macro narrative.

"For now, the rally is intact - but it rests on a ceasefire that has yet to become a functioning supply chain," he added.

Reporting by Josh White for Sharecast.com.