Asia Markets Rally Hard on Hormuz Reopening: Oil Tumbles, Stocks Soar, Bonds Rally
Share markets and bonds rallied hard in Asia on Monday and oil prices tumbled as the United States and Iran confirmed the framework deal to end the war and reopen the Strait of Hormuz. US crude dropped nearly 5%; Brent crude tumbled to $90.50 a barrel from Friday’s $95.20 close. Asian equity indices surged across the board; bonds rallied as yield curves shifted lower. The Reuters Sydney market wire described the move as “rallying hard”. The Monday London open is positioned for a material risk-on follow-through; FTSE futures point to a +1.15% open.
The Brent ~5% tumble is consistent with the 80-85% framework-deal probability Saturday-evening pricing finalising into a signed-deal outcome. The Asian risk-on rally is the structural macro response to the lifting of the energy supply-shock risk that had compounded through the early-summer phase of the war. The Monday London open is expected to follow Asia higher; the FTSE 100 +1.15% futures positioning at 10,575 is the structural risk-on follow-through. UK 10-year gilt yields slipping to 4.88% material below the 5% line eases the political-mathematical question for Chancellor Rachel Reeves through the leadership-transition uncertainty. The Brent $88-95 band that delivers a flat Ofgem October price cap is now the operative range.