At a glance:

• Oil dropped to two-week lows below $100 a barrel as US-Iran deal optimism outweighed the blockade’s continued hold on Hormuz traffic
• Trump walked back weekend optimism on Sunday, saying there was no rush for a deal and the naval blockade stays until an agreement is signed, certified and ratified
• Risk assets firmed broadly: S&P 500 futures up 0.7%, Nasdaq futures up 1.2%, spot gold up 1.4%
• The dollar weakened against major currencies, with the yuan fixing at its strongest against the dollar since February 2023 after the PBOC set the USD/CNY reference rate at a three-year high for the Chinese currency
• The Nikkei surged to successive record highs, clearing 64,000 and then 65,000 for the first time
• Two LNG tankers exited the Strait of Hormuz bound for Pakistan and China; a supertanker carrying Iraqi crude for China cleared the Gulf on Saturday after nearly three months stranded

Asia Pacific markets opened the week in a constructive mood, with deal optimism doing most of the work even as the diplomatic picture remained messier than the price action implied.

Oil was the pivot point. Prices slipped below $100 a barrel for the first time in two weeks as traders leaned into weekend reports that Washington and Tehran had largely negotiated a memorandum of understanding to reopen the Strait of Hormuz. That move rippled outward in the way Iran-related relief trades typically do: the dollar softened, equities futures firmed, and gold added to recent gains, with the weaker greenback making dollar-priced bullion more accessible to buyers in other currencies.

The optimism had a short shelf life diplomatically, if not in markets. Trump posted on Truth Social on Sunday that the naval blockade on Iranian vessels would remain fully in place until any deal is certified and signed, and that his representatives had been told not to rush. The gap between the Saturday MOU framing and the Sunday blockade-stays message was wide enough to give pause, yet markets chose to price the direction of travel rather than the current state of play.

Shipping data offered some tentative corroboration of easing pressure. Two LNG tankers moved through the strait on Monday, one heading to Pakistan and one to China, while a supertanker loaded with Iraqi crude for China had exited the Gulf on Saturday after sitting stranded for close to three months. Throughput remains far below pre-war norms, but the direction is the right one.

Elsewhere in the session, the Nikkei delivered the headline of the day, clearing 64,000 and then pushing on through 65,000 for the first time on record. The People’s Bank of China added a policy signal of its own, fixing the USD/CNY reference rate at its strongest level for the yuan since February 2023, a move read as a quiet endorsement of Chinese currency strength in the current environment.