By Wayne Cole
SYDNEY, May 11 (Reuters) – The dollar climbed in Asia on Monday on signs that talks between the United States and Iran were deadlocked, leaving the vital Strait of Hormuz all but shut and sending oil prices higher.
U.S. stock futures wobbled and in Asia gains in a handful of AI-related stocks lifted share markets in Seoul and mainland China.
President Donald Trump on Sunday rejected Iran’s response to a U.S. proposal for peace talks to end the war, saying Tehran’s demands were “totally unacceptable.”
An Iranian plan sent to the U.S. stressed the need for an end to the war on all fronts and the lifting of sanctions on Tehran, along with reparations and a recognition of Iran’s control of the Strait, Iranian media reported.
“The conflict in the Middle East is now entering its 11th week,” noted Bruce Kasman, global head of economics at JPMorgan. “Energy prices have surged but remain at levels that are headwinds rather than expansion-ending obstacles.”
“The risk of a sharper move rises with each week the Strait of Hormuz stays closed, and our commodities team sees operational stress levels starting sometime in June.”
Iran has effectively shut the strait since the war started late in February, choking off a corridor that normally carries around a fifth of the world’s oil and gas.
Brent oil futures quickly rose 4.3% in Asian trade to $105.47 a barrel, while U.S. crude gained 4.7% to $99.92 a barrel. [O/R]
The dollar benefited as a store of liquidity during risk events, edging up 0.33% on the Japanese yen to 157.16 yen, while the euro dipped 0.24% to $1.1757.
Japan is wagering that a hawkish shift at the Bank of Japan and an endorsement from U.S. Treasury Secretary Scott Bessent can give yen-buying intervention extra bite and help to slow the embattled currency’s slide.
Both Europe and Japan are major importers of oil, while the U.S. is a net exporter.
S&P 500 futures slipped 0.1%, while Nasdaq futures eased 0.05%. Shares had hit record highs last week on the back of upbeat corporate earnings and a solid payrolls report.
Results out this week include tech networking equipment firm Cisco and semiconductor equipment maker Applied Materials. Heavyweights Nvidia and Walmart are due later in the month.
Japan’s Nikkei fell 0.36%, erasing earlier gains. South Korea’s chipmaker-heavy KOSPI index rose 4%.
China’s CSI300 blue-chip index was up 1.4%. while Hong Kong’s Hang Seng Index slipped 0.3%.
Data on Monday showed China’s producer prices jumped to a 45-month high, while consumer inflation also accelerated on elevated global energy costs.
The Gulf will be on the agenda when Trump visits China from Wednesday, meeting Chinese President Xi Jinping in their first face-to-face talks in more than six months.
Trade, Taiwan, artificial intelligence and nuclear weapons are all set to be discussed as they weigh extending a critical minerals deal.
In commodity markets, gold slipped 0.5% to $4,690 an ounce, having drawn scant support as a safe haven or as a hedge against inflation risks. [GOL/]
(Reoporting by Wayne Cole; Editing by Edmund Klamann and Shri Navaratnam)
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