Oil prices held steady after US president Donald Trump said the US would help ships leave the Strait of Hormuz, starting on Monday.
Iran has rejected the plan, but Mr Trump also said talks with Iran could lead to positive outcomes.
A statement from the US Central Command said support would include guided-missile destroyers, over 100 land- and sea-based aircraft and 15,000 service members. A report from Axios later claimed the Navy would not necessarily escort ships through the strait.
Iran earlier said the US had responded to its 14-point proposal via Pakistan and it was reviewing the response, though Trump said it was unlikely to be acceptable.
Investors decided to reserve judgement and left Brent crude futures little changed at $108.35 per barrel, having recovered from an initial drop of more than two per cent, while US crude eased 0.1 per cent to $101.85.
Dealers noted a bulk carrier had reported being attacked by multiple small craft while transiting past Sirik in Iran on Sunday, though it was not clear how many ships would try to run through the Strait of Hormuz even with Navy protection.
A holiday in Japan made for thin trading conditions, leaving Nikkei futures up only modestly at 59,880 versus a cash close of 59,513.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 2.8 per cent, led by tech-heavy South Korean stocks which returned from holiday with a jump of 4.05 per cent. Chinese blue chips were off 0.06 per cent.
Eurotoxx 50 futures and Dax futures each added 0.3 per cent. S&P 500 futures gained 0.1 per cent and Nasdaq futures rose 0.3 per cent, as markets braced for more than 100 earnings reports this week.
Companies reporting include Advanced Micro Devices, Super Micro Computer, Palantir, Walt Disney and McDonald’s.
The S&P 500 EPS growth rate was running at 25 per cent and accounting for one-off gains at a still brisk 16 per cent, said analysts at Goldman Sachs in a note.
“Despite elevated energy prices and geopolitical uncertainty, corporate guidance and analyst estimate revisions have remained strong so far this quarter,” they said. “However, the reward for EPS beats has been unusually small.”
Concerns remained about the scale of artificial intelligence capex investment which was now at $751bn for 2026, $80bn above estimates at the start of the earnings season and 83 per cent above 2025 spending.
The threat of oil-driven inflation had also lifted bond yields in a challenge to equity valuations, while several major central banks had turned hawkish on policy.
Markets implied just 2 basis points of easing from the Federal Reserve by the end of the year compared with 11 basis points a week ago. Expectations for the European Central Bank had climbed to 76 basis points of hikes, with the Bank of England at 63 basis points.
Australia’s central bank meets on Tuesday and is considered likely to hike its cash rate for a third time running as it battles stubborn inflationary pressures.
The outlook for Fed policy could be budged by a raft of data this week which includes the payrolls report for April on Friday. Median forecasts are for a rise of 60,000 in jobs following March’s outsized 178,000 gain, though problems with seasonal adjustment make for much uncertainty.
Analysts at Citi, for instance, are predicting a 15,000 drop in payrolls and a rise in unemployment to 4.3 per cent.
In currency markets, the dollar was a shade softer as investors waited for more developments in the Middle East and, crucially, whether the Strait of Hormuz could be opened.
The dollar was steady at 157.21 yen, still smarting from last week’s Japanese intervention which analysts thought could have amounted to around $35bn.
The euro was flat at $1.1726, while the pound held at $1.3584 ahead of local elections in Britain which could see heavy losses for the ruling Labour Party.
In commodity markets, gold was 0.2 per cent lower at $4,603 an ounce , and well within recent trading ranges.