Asian Markets Retreat as Oil Surges Past $100 Amid Iran War Uncertainty
Asian stock markets retreated on Thursday, reversing earlier gains that had propelled Japan's Nikkei 225 index above the 60,000 mark for the first time. This downturn occurred despite fresh record highs on Wall Street, as investor sentiment was weighed down by shaky prospects for further peace talks to end the ongoing war with Iran. Concurrently, oil prices surged, with Brent crude topping $100 per barrel, reflecting heightened geopolitical tensions and supply disruptions.
Market Movements Across Asia
In Japan, the Nikkei 225 initially climbed to 60,013.98 before losing 1.5% to close at 58,707.60. South Korea's Kospi also gave up earlier gains, finishing 0.1% lower at 6,414.57 after briefly surpassing 6,500. The South Korean government reported a better-than-expected annual economic growth rate of 1.7% for the January-March quarter, driven by strong exports, particularly of computer chips fueled by the artificial intelligence boom.
Other major Asian indices followed suit:
- Hong Kong's Hang Seng shed 1.1% to 25,865.88.
- The Shanghai Composite index fell 0.8% to 4,073.71.
- Australia's S&P/ASX 200 declined 0.8% to 8,770.70.
- Taiwan's Taiex sank 1.6%, and India's Sensex lost 0.6%.
U.S. futures also fell back, indicating a broader market unease following the rally on Wall Street a day earlier.
Geopolitical Tensions Drive Oil Price Surge
The retreat in Asian markets is largely attributed to growing uncertainty over the Iran war, now in its eighth week. Despite U.S. President Donald Trump extending a ceasefire, prospects for another round of peace talks remain unclear. Recent escalations, including Iran firing on three ships in the Strait of Hormuz after the U.S. imposed a sea blockade of Iranian ports, have dimmed hopes for a swift resolution.
Maritime traffic through the Strait of Hormuz, which typically handles about a fifth of the world's oil, remains largely halted. The likelihood of reopening diminished further after Iran's Revolutionary Guard seized two of the attacked ships. This has led to a significant energy shock, with global oil prices soaring.
Early Thursday, Brent crude, the international benchmark, was 1.5% higher at $103.39 per barrel, up from around $70 before the war began in late February. Benchmark U.S. crude also rose 1.8% to $94.66 per barrel.
ING Bank strategists Warren Patterson and Ewa Manthey noted in a research note that as hopes for a U.S.-Iran resolution fade, the oil market is "having to reprice expectations." They warned, "As hopes fade, the reality of the supply disruption will set in, leaving further upside for prices. If no progress is made, the market will become increasingly numb to the noise and headlines that have dictated price action recently."
Wall Street Records Contrast with Asian Retreat
In contrast to Asia's decline, Wall Street set new records on Wednesday, buoyed by strong corporate earnings and the extended ceasefire in the Iran war. The benchmark S&P 500 jumped 1% to 7,137.90, surpassing its previous record high. The Dow Jones Industrial Average climbed 0.7% to 49,490.03, and the Nasdaq composite gained 1.6% to 24,657.57, also setting a record.
Notable performers included:
- GE Vernova, which surged 13.7% after reporting stronger-than-expected quarterly profits, benefiting from robust equipment orders linked to the AI boom.
- Boeing, up 5.5%, and Philip Morris International, up 7%, both following better-than-expected results.
Other Market Developments
In early Thursday dealings, precious metals and currency markets showed mixed movements. Gold prices dropped 0.6% to $4,722.70 per ounce, while silver prices lost 2.3% to $76.17 an ounce. The U.S. dollar strengthened slightly against the Japanese yen, rising to 159.53 yen from 159.48 yen. The euro edged down to $1.1696 from $1.1705.
This market activity underscores the complex interplay between corporate performance, geopolitical events, and investor sentiment, with the Iran war continuing to cast a long shadow over global financial stability.
