Asia open: US futures gap up on US-Iran peace deal hopes with US dollar in retreat

• Global risk sentiment improved sharply after senior U.S. officials signalled that a U.S.-Iran peace agreement may be nearing completion, triggering strong gains in U.S. equity futures and sending the U.S. dollar lower.
• The U.S. economy is showing increasing stagflationary pressures as consumer sentiment collapsed to a record low while inflation expectations continued to rise, placing new Federal Reserve Chair Kevin Warsh under immediate policy pressure.
• Asia Pacific markets rallied on easing geopolitical fears, led by Japan’s Nikkei 225 hitting a fresh all-time high, while Southeast Asia’s accelerating shift toward biofuels is beginning to create broader food supply and inflation risks across the region.
• Chart of the day: WTI crude bearish break below 50-day MA with key short-term resistance at $100.80/bbl. Potential near-term weakness to expose intermediate supports at $90.50 and $87.60.

• US officials signalled an imminent US-Iran peace deal: In contrast to U.S. President Donald Trump, who stated earlier on Sunday that he told his representatives "not to rush" into any deal with Iran, senior US officials hightlighted that US and Iran are closing on in a deal to reopen the Strait of Hormuz that triggered an intraday rally in S&P 500 (+0.8%) and Nasdaq 100 (+1.3%) E-mini futures in today’s Asia opening session.
• US consumer sentiment plunges to an all-time record Low: The University of Michigan's consumer sentiment index dropped to 44.8 in May, the lowest level on record, falling below the pandemic and 2008 financial crisis troughs. The collapse is directly tied to soaring gasoline prices approaching $5 a gallon nationwide due to the ongoing Middle East conflict.
• Kevin Warsh sworn In as Fed Chair amid stagflation: Kevin Warsh officially took the helm of the U.S. Federal Reserve on Friday. He assumes leadership of a central bank navigating a treacherous environment where surging fuel costs are driving up inflation and rapidly eroding consumer demand.
• Gold Surges as dollar weakens: Spot gold prices rose 1.2% to $4,564/oz on Monday, supported by a weaker U.S. dollar and lower oil prices due to an uptick in optimism over an imminent US-Iran peace deal.
• Southeast Asia pivots to biofuels, threatening food supply: Cut off from Middle Eastern energy by the Strait of Hormuz closure, Southeast Asian nations are shifting palm oil and local crops into diesel and gasoline blends. This hasty transition is squeezing regional supplies for cooking oil, animal feed, and agricultural exports.

• Geopolitical whiplash & energy uncertainty: Conflicting messaging between US officials over US-Iran peace deal. While oil prices had initially hit two-week lows on peace optimism, the lack of a finalized deal means the Strait of Hormuz remains closed, perpetuating the global supply shock.
• Stagflationary pressures worsen: With consumer sentiment at record lows and 1-year inflation expectations rising to 4.8%, according to the final May reading of the University of Michigan US consumer sentiment survey, the U.S. economy is flashing classic stagflation warning signs. Rising pump prices are disproportionately impacting lower-income consumers, severely challenging the incoming Fed Chair's policy options.
• Food vs. fuel crisis in emerging markets: The prolonged energy shock is forcing structural shifts in emerging markets. Southeast Asia's desperate turn to crops for fuel highlights how the geopolitical oil crisis is spilling over into global agricultural and food security supply chains, compounding inflation risks.

Equities: The S&P 500's 8-week rally is showing signs of potential buyer exhaustion, according to several technical analysis elements. Even if a US-Iran peace deal is finalized, it could trigger a "sell the news" event, leaving the broader market at risk of rolling over as the historically weak month of June approaches.

Fixed Income: Incoming Fed Chair Kevin Warsh faces a daunting bond market environment. With U.S. long-term 5-year inflation expectations surging to 3.9% (the highest level since October 2025, based on May’s survey data from the University of Michigan consumer sentiment report), Treasury yields remain highly sensitive to any further energy-driven inflation spikes.

FX: The U.S. Dollar weakened over the weekend, offering a slight reprieve to emerging market currencies and making greenback-priced commodities, such as gold and silver, more affordable for international buyers.

Commodities: Oil prices initially hit two-week lows on peace deal optimism, but the market remains highly reactive to Trump's subsequent "do not rush" remarks. Meanwhile, spot gold jumped 1.2% to $4,564/oz, and spot silver surged 3.1% to $77.85/oz.

• Stock markets & regional security: Key Asia Pacific markets are starting the week with a bullish footing, in line with the intraday rallies seen in US futures; NIkkei 225 skyrocketed by 3.1% to hit a fresh intraday all-time high of 65,330. China A50 (+0.7%), ASX 200 (+0.6%), STI (+0.6%). Regional defense and security are taking center stage this week. The Quad foreign ministers (U.S., Japan, India, Australia) are meeting in New Delhi on Tuesday, with the Iran war featuring prominently, followed by the Shangri-La Dialogue in Singapore on Friday.
• Commodities & food security: Indonesia and Malaysia's rapid shifts toward higher biodiesel blends to replace lost Middle Eastern oil are squeezing cooking oil supplies. This diversion is expected to drive up food inflation and disrupt export balances across the region.
• Diplomatic realignment: Philippine President Ferdinand Marcos Jr. is embarking on a visit to Japan to upgrade bilateral relations, reflecting broader regional efforts to secure energy cooperation and maritime security amid global instability.

1. US-Iran peace deal news flows Impact: All asset classes
2. SG Core Inflation (Apr) - 1:00 SGT (consensus: 1.7% y/y, Mar: 1.7%) Impact: USD/SGD, SGD crosses, STI

The price actions of the West Texas oil CFD (a proxy of the WTI crude oil futures) have staged an intraday bearish breakdown below its 50-day moving average on Monday, 25 May’s Asian opening season, its first breakdown after prior price actions challenged the 50-day moving average on the previous two occasions (6 May 2026, and 17 April 2026).

Hourly RSI momentum is still showing near-term bearish momentum conditions (oversold but no bullish divergence condition).

Watch the $100.80 short-term pivotal resistance (also close to the 50-day moving average) for further potential weakness to expose the next intermediate supports at $90.50 and $87.60.

On the flip side, a clearance with an hourly close above $100.80 negates the bearish tone for a squeeze up towards the next intermediate resistances at $105.75 and $109.35.