World shares are mixed, US futures fall as Iran talks make progress

HONG KONG: World shares were mixed Monday with markets in Japan and South Korea trading higher and setting new records, while oil prices edged lower on fresh optimism over progress in US-Iran negotiations.

US futures were trading lower.

In early European trading, Britain's FTSE 100 edged down less than 0.1 per cent to 10,360.01, after Keir Starmer announced he was stepping down as leader of the governing Labour Party and will leave office within weeks. Germany's DAX was down 0.2 per cent to 24,940.33, while France's CAC 40 fell 0.5 per cent to 8,378.85.

In Asia, Tokyo's Nikkei 225 jumped 1.6 per cent and ended at another all-time record of 72,353.96, led by technology stocks that were fuelled by excitement over the global artificial intelligence boom.

Japan's SoftBank Group, the multinational investment holding company with a strong AI focus, rose 1.9 per cent. Chip equipment maker Tokyo Electron was up 3.2 per cent.

South Korea's Kospi gained 0.7 per cent to 9,114.55, also a record closing high, helped by AI-related shares. Memory chip maker SK Hynix surged 5.6 per cent.

The Nikkei 225 and Kospi were up more than 40 per cent and 120 per cent, respectively, over the past six months. Both benchmark indexes have been setting fresh records in recent days on AI enthusiasm and positive developments from the Iran war.

“We're seeing another strong market today,” Neil Newman, managing director and head of strategy at Astris Advisory Japan, said. He cautioned that the Japanese market is “probably getting a little stretched” from an investor's point of view, “especially with what's going (on) in the Middle East.”

Hong Kong's Hang Seng lost 0.7 per cent to 23,768.52, while the Shanghai Composite index was 1.8 per cent higher at 4,163.10.

Australia's S&P/ASX 200 was down 0.1 per cent to 8,816.10.

Taiwan's Taiex rose 2.8 per cent. India's Sensex was up 0.5 per cent.

Oil prices fell as talks progressed over a permanent end to the Iran war. Brent crude, the international standard, was trading 1.6 per cent lower to USD 79.30 per barrel. It was at roughly USD 70 a barrel before the start of the war in late February.

High-level negotiations in Switzerland between the US and Iran concluded early Monday, with lower-level technical talks set for the rest of the week. Mediators Qatar and Pakistan said “encouraging progress” was made during the negotiations.

Meanwhile, while Iran said the Strait of Hormuz, a key waterway for oil and gas transport, was shut again over the weekend, the US said that traffic had continued.

“Moving towards a more permanent deal will be challenging, with very real risks of a flare-up in hostilities,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a commentary on Monday.

Thomas Mathews, head of markets for Asia Pacific from Capital Economics, believes energy flows in the strait are more likely to recover only gradually. “With the controversial -- and fragile -- US-Iran peace process now underway, attention is turning to how quickly tankers return to the Strait of Hormuz to load energy supplies,” he wrote in a note.

In the US, investors are also monitoring May's personal consumption expenditures price index, or PCE, the preferred inflation gauge of the Federal Reserve, which is due to be released this Thursday.

In other dealings, the US dollar rose to 161.74 Japanese yen from 161.22 yen. The euro was trading at USD 1.1457, down from USD 1.1473.