Japan’s market rally accelerates as buyers pile into equities

Japan stocks rallied to new all-time highs on Monday because traders finally got something they have been begging for: cheaper oil and less panic around the Strait of Hormuz.

The Nikkei 225 (.N225) index jumped through 65,000 for the first time ever, hit a new record during the session, and closed at 65,158, up by 1,819 points, or 2.87%.

The Topix index also surged by 1.29% to 3,942.57, while West Texas Intermediate crude futures for July dropped 4.71% to $92.06 a barrel in early Asian trading.

Brent crude futures for July fell by 4.42% to $98.96, but oil prices slipped by more than 5% at one point after President Donald Trump said talks with Iran were “proceeding in an orderly and constructive manner.” He also said he told his representatives “not to rush into a deal in that time is on [their] side.”

Lower crude prices pull buyers back into Japan’s record-breaking equity trade

The Japan rally came during a strange trading day because parts of Asia were quiet for holidays. Hong Kong’s Hang Seng Index (.HSI) and South Korea’s Kospi Index (.KS11) were shut for public holidays. U.S. markets is also closed today for Memorial Day.

Meanwhile, Taiwan’s Taiex index closed up 3.26% at 43,644.40 after touching a record high, Australia’s S&P/ASX 200 (.AXJO) gained 0.40% to 8,692.00, China’s CSI 300 rose 1.58% to 4,921.6, while the Shanghai Composite (.SSEC) added 0.96% to 4,152.569, and India’s Nifty 50 (.NSEI) climbed 1.09% to 23,985.90.

On Friday, America’s Dow Jones Industrial Average gained 294.04 points, or 0.58%, to close at 50,579.70, making an intraday high and finishing at another record. The S&P 500 rose 0.37% to 7,473.47, while the Nasdaq Composite added 0.19% to end at 26,343.97. All these gave Asian traders a clean setup before Monday’s holiday-thinned session.

The bigger story is still Hormuz. Iran has controlled shipping through the waterway since early March by forcing vessels to get clearance before passing or face possible attacks.

Trump keeps the U.S. blockade on Iran while metals traders price the inflation risk

That came after U.S. and Israeli airstrikes killed Ayatollah Ali Khamenei and other top Iranian leaders.

Before the war, about 20% of the world’s oil supply passed through that route. When Iran choked traffic there, Middle East oil exports crashed, and the market got hit with a historic supply shock.

The U.S. answered Iran’s action with its own blockade on Iranian ports and vessels. On Sunday, Donald said the U.S. blockade would stay in “full force and effect until an agreement is reached, certified, and signed.”

Gold also rose Monday as the dollar weakened and oil cooled. Spot gold gained 1.1% to $4,559.07 per ounce by 0736 GMT. U.S. gold futures for June delivery rose 0.8% to $4,559.80.

Other metals also rallied. Spot silver jumped 3.1% to $77.79 per ounce. Platinum rose 2.3% to $1,966.59, and palladium gained 2.7% to $1,384.70.

The reason behind this is lower crude can cool inflation fears. The war risk has not just magically disappeared.

Cryptopolitan had reported on Friday that Kevin Warsh was sworn in as chair of the U.S. Federal Reserve by Trump at the White House. Who knows how he’ll rule?

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