Asian Markets Edge Higher as Easing Oil Lifts Sentiment

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By Richard Fargose

Richard is an independent financial journalist who tracks financial markets and macroeconomic developments

July 6, 2026 at 1:55 AM IST

Global Mood: Cautiously Risk-On
Drivers: OPEC+ Output Increase, Improving Geopolitical Sentiment

Asian markets opened mostly higher on Monday as easing oil prices, improving energy supply prospects a.0nd firmer Wall Street futures supported investor sentiment. Optimism was aided by OPEC+'s decision to raise output by 188,000 barrels per day from August and the continued flow of vessels through the Strait of Hormuz, easing concerns over supply disruptions in West Asia. The prospect of lower energy prices also reduced expectations of an imminent Federal Reserve rate hike.

MSCI's Asia-Pacific index outside Japan gained 0.4%, while South Korea's KOSPI rose 2.25% on continued strength in AI-linked chipmakers. Japan's Nikkei was little changed as gains in industrial and consumer stocks were offset by weakness in technology shares amid concerns over AI valuations. Australian equities slipped 0.2% as investors booked profits ahead of key domestic inflation data and China prepared to release June CPI and PPI figures later this week.

THE BIG STORY
Iran held large-scale funeral ceremonies on Sunday for slain former Supreme Leader Ali Khamenei and several members of his family, months after they were killed during the US-Israeli military campaign against Iran. State television showed Khamenei’s sons Mostafa, Meysam and Masoud leading funeral prayers at Tehran’s Imam Khomeini Grand Mosalla, while his successor, Mojtaba Khamenei, did not attend the public ceremony.

The week-long state funeral is intended to reinforce public support for Iran’s leadership following the conflict that erupted in February and ended with a fragile ceasefire after weeks of fighting between Iran, the United States and Israel. Iranian authorities also plan to take Khamenei’s remains to prominent Shi'ite religious sites in neighbouring Iraq as part of nationwide commemorations.

Meanwhile, attention shifted to Europe, where Donald Trump is set to meet Volodymyr Zelenskyy on the sidelines of the NATO summit in Turkey this week in a renewed effort to broker an end to the Russia–Ukraine war. Trump is also scheduled to hold talks with Turkish President Recep Tayyip Erdoğan and Syrian President Ahmed al-Sharaa.

According to senior US officials, discussions with Zelenskyy will focus on ending the conflict as battlefield conditions have largely stabilised in recent months with limited territorial gains by either side. Trump is also expected to press NATO allies to increase defence spending, underscoring Washington’s continued push for greater burden-sharing within the alliance.

The developments kept geopolitical risks in focus as markets continued monitoring political transitions in Iran alongside diplomatic efforts to resolve conflicts in both West Asia and Eastern Europe.

Data Spotlight
OPEC+ agreed to raise oil production targets by 188,000 barrels per day from August, extending its phased supply increases after similar hikes in June and July. The latest decision comes as oil prices have softened amid the gradual reopening of the Strait of Hormuz and improving prospects for regional energy exports.

Since April, the group's seven core producers have announced cumulative output increases of nearly 800,000 barrels per day, although much of the additional supply has remained constrained by disruptions caused by the conflict in West Asia and the temporary closure of the Strait of Hormuz.

Major Gulf producers, including Saudi Arabia, Kuwait and Iraq, were among the countries most affected by shipping disruptions through the strategic waterway.

Takeaway
OPEC+'s latest production increase signals confidence that improving shipping conditions through the Strait of Hormuz will gradually restore global oil supplies, potentially easing upward pressure on crude prices if geopolitical tensions continue to subside.

WHAT HAPPENED OVERNIGHT

US Dollar holds below 101, on track to snap two-week winning streak after jobs miss
- The dollar index held below 101 after Thursday's tumble, as June payrolls of just 57,000, well below the 110,000 forecast, led traders to pare Fed rate hike bets.
- Fed funds futures now imply 50% odds of a September hike, down from 67% before the jobs report, with weak ADP data earlier in the week adding to the softer labour market picture.
- Warsh reiterated this week that inflation expectations are moderating while reaffirming the Fed's commitment to price stability.
Oil little changed on the week as US-Iran peace hopes underpin fragile stability
- Brent settled at $71.94/bbl (+0.19%) and WTI at $68.78 (+0.13%), with the week ending nearly flat amid light trading ahead of the US Independence Day holiday.
- Both benchmarks touched their lowest levels since before the Iran war on Thursday before recovering slightly.
- Citi said the MOU is expected to hold not out of trust but because the incentives to break it are poor for both sides, though Hormuz toll and administration disputes remain contentious.
- OPEC output jumped 3.3 million bpd month-on-month in June as Gulf producers began reviving supply, with Kuwait's output surging to 1.65 million bpd from 580,000 bpd in May.
- Saudi Aramco switched to spot pricing from longer-term contracts to accelerate Asian sales, with at least five supertankers carrying 10 million barrels already through the strait.
- Middle Eastern supply recovery is outpacing initial expectations while Chinese import demand remains weak, adding to near-term oversupply pressure.
- The market structure flipped from backwardation to contango, signalling fading shortage concerns as returning Gulf supply creates a near-term glut.

Day’s Ledger*

Economic Data

UK June S&P Global Construction PMI
US June S&P Global Services PMI
US June ISM Non-Manufacturing PMI
Canada BoC Business Outlook Survey

Corporate Actions

Apollo Micro Systems to consider fund raising options
Ecos (India) Mobility & Hospitality to consider dividend
Embassy Developments to consider fund raising options
Mamata Machinery to consider dividend
SEPC to consider fund raising options

Policy

ECB President Lagarde Speaks
ECB's Schnabel Speaks
Fed Waller Speaks
BoE MPC Member Mann

Tickers to Watch

ENVIRO INFRA ENGINEERS received two Uttar Pradesh Jal Nigam orders worth a combined ₹2.57 billion for sewage treatment plant projects.
FORTIS HEALTHCARE signed an O&M agreement with Dion Group for a 300-bed greenfield multi-specialty hospital in Cuttack, Odisha.
GK ENERGY received an MSEDCL empanelment for 10,000 off-grid solar water pumping systems worth ₹2.36 billion.
HDFC BANK reported gross advances rose 15.4% on year to ₹30.61 trillion as on June 30, while deposits increased 14.7% to ₹31.70 trillion.
ICICI PRUDENTIAL LIFE INSURANCE will seek IRDAI approval to reclassify Prudential Corporation Holdings from promoter to investor.
IDBI BANK reported total business grew 15% on year to ₹5.84 trillion as on June 30, deposits rose 10% to ₹3.25 trillion, net advances increased 22% to ₹2.59 trillion, and CASA deposits grew 7% to ₹1.42 trillion.
INDUSIND BANK reported net advances declined 2.3% on year to ₹3.26 trillion as on June 30, deposits rose 4.5% to ₹4.15 trillion, while CASA ratio fell to 29.5% from 31.5%.
INNOVISION received an NHAI order worth ₹1.02 billion for user fee collection at the Sirohi Bahali Fee Plaza.
KOTAK MAHINDRA BANK reported net advances grew 15.1% on year to ₹5.12 trillion as on June 30, deposits rose 11.7% to ₹5.72 trillion, and CASA deposits increased 10.2% to ₹2.31 trillion.
L&T FINANCE reported April-June retail disbursements rose 36% on year to ₹238 billion, retail loan book grew 28% to ₹1.27 trillion as on June 30, while retailisation remained at 98%.
MANAPPURAM FINANCE said CEO Deepak Reddy resigned and will step down effective Dec. 31 to pursue other interests.
NBCC (INDIA) secured three orders worth ₹1.32 billion from the Navodaya Vidyalaya Samiti and the Government of Odisha.
PRESTIGE ESTATES PROJECTS agreed to acquire a 50% stake in Advent Convention and Hotels International, which is developing a commercial project in Mumbai.
PTC INDIA signed a PPA with NTPC GREEN ENERGY subsidiary NTPC Renewable Energy to procure 1,200 MW of solar power under a bilateral arrangement.
RBL BANK reported deposits rose 11% on year to ₹1.24 trillion as on June 30, gross advances jumped 21% to ₹1.17 trillion, while CASA ratio declined to 29.2% from 32.5%.
RUBICON RESEARCH said the US FDA issued two observations after an unannounced inspection of its Pithampur manufacturing facility.
SHAKTI PUMPS (INDIA) received an MSEDCL empanelment for 15,000 off-grid solar water pumping systems worth ₹3.54 billion.
SUPRIYA LIFESCIENCE said the Customs Department has initiated an investigation against its General Manager (Sales & Marketing), Sreekant Sreedharan.
YES BANK reported loans and advances increased 18.4% on year to ₹2.85 trillion as on June 30, deposits rose 14.3% to ₹3.15 trillion, and CASA deposits grew 14.3% to ₹1.03 trillion.

Must Read

(*Compiled from various media sources)

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

What did Prime Minister Sanae Takaichi's visit to India really achieve?

Beyond the joint statements and diplomatic optics, the visit reflected a larger strategic shift. As uncertainty over the US role in the Indo-Pacific grows and China's regional assertiveness intensifies, India and Japan are exploring how far they can deepen cooperation without compromising their own strategic priorities. The outcomes on defence, technology, supply chains and maritime security point to steady progress, even if a transformational breakthrough remains some distance away.

Former Ambassador Ashok K. Kantha argues that the visit is best understood not as a landmark moment, but as a reaffirmation of a partnership that is becoming increasingly important in shaping Asia's strategic balance. The real test, however, will be whether both countries can convert diplomatic intent into sustained policy and tangible outcomes.

(*Compiled from various media sources)

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

What did Prime Minister Sanae Takaichi's visit to India really achieve?