Asian and European Markets Rebound as Oil Falls

Quick overview

After last week’s nervous close, Asia-Pacific and European markets rallied on Monday, while oil prices fell as much as 4%, paring back part of Friday’s 13% surge triggered by the outbreak of conflict in the Middle East.

Asian equities showed resilience despite mounting geopolitical uncertainty due to intensifying clashes between Israel and Iran. Gains across the region strengthened throughout the session, with Japan’s Nikkei rising over 1%.

Oil prices pulled back even as tensions in the Middle East continued to rise. Monday marked the fourth consecutive day of mutual attacks on energy infrastructure between Iran and Israel—an escalation that threatens to further disrupt global markets.

Iran has stated it is considering closing the Strait of Hormuz, a critical passageway for global oil shipments. Despite the risks, investors showed no signs of panic.

Currency markets remained stable and Wall Street futures turned positive

The rebound comes during a week packed with central bank meetings and as G7 leaders convene in Canada amid ongoing global trade tensions, particularly surrounding U.S. tariffs. The broader MSCI Asia-Pacific index (excluding Japan) rose 1.1%, while South Korea’s Kospi added 1.8%.

In China, the main benchmark gained 0.4% after May retail sales grew 6.4% year-over-year—beating expectations and marking the fastest pace since late 2023. Industrial production matched forecasts, and analysts emphasized the need for continued policy support to sustain the recovery.

Meanwhile, the Bank of Japan kicked off its two-day policy meeting, with most analysts expecting rates to remain unchanged and a potential slowdown in government bond purchases.

European Markets Edge Higher

European stocks also started the week in positive territory despite ongoing geopolitical tensions and investor caution ahead of the U.S. Federal Reserve’s rate decision on Wednesday.

Milan led the gains with a 1.2% jump, followed by Madrid (+1.6%), Frankfurt (+0.8%), Paris (+0.9%), and London (+0.4%). The Euro Stoxx 50, which tracks the region’s largest companies, climbed 1%. The euro appreciated 0.4% against the U.S. dollar.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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