Stock market: bonds rise in Asia following the fall in oil prices

Asia-Pacific bonds rose in tandem with Treasury futures, as falling oil prices eased inflation fears after the United States reported progress in diplomatic efforts to end the war with Iran.

Australian and New Zealand government bonds are trading higher, with ten-year yields in both countries down by at least three basis points. Ten-year Treasury futures have also risen, whilst spot Treasuries will not be traded during the Asian session due to a public holiday in Japan.

Brent crude was set to record its longest losing streak in the past year, whilst President Donald Trump stated that US officials had held a ‘very positive’ meeting with Iranian envoys, at a time when Washington was renewing its efforts to bring an end to the conflict. However, oil prices fell by 1.1 per cent to around $98.20 a barrel, heading for a sixth consecutive session of declines.

Elsewhere, the initial rise in Asian share prices, driven by gains among chipmakers, lost some ground due to a fall in Hong Kong technology shares. The MSCI Asia-Pacific share index thus rose by 0.1 per cent, having previously gained as much as 0.5 per cent.

With a light economic data calendar this week, traders are focusing on developments relating to Iran, looking for signs that oil prices might fall further – which could ease inflation fears – and on government bonds, after yields reached their highest levels in decades earlier this month.