What is the story about?
Asian stock markets experienced a downturn on Thursday in response to U.S. military strikes against Iran, which the Pentagon described as defensive actions.
The strikes included the downing of Iranian drones near the Strait of Hormuz and the targeting of an Iranian control station. In the wake of these developments, oil prices surged by more than $1 a barrel after a significant drop the previous day, while U.S. futures showed slight declines. Investors reacted to the escalating tensions and the uncertain implications for oil supply.
U.S. Military Actions
U.S. Central Command reported that American forces intercepted four Iranian drones that posed a threat near strategic waterways. Additionally, military operations targeted an Iranian ground control station in Bandar Abbas, preventing the launch of a fifth drone.Market Reactions
In early trading, Japan's Nikkei 225 index saw a marginal increase of less than 0.1%, closing at 65,039.78. Conversely, South Korea's Kospi index fell by 1.2% to 8,126.67, and Hong Kong's Hang Seng index dropped 1.9% to 24,855.86. The Shanghai Composite index also declined by 0.3% to 4,080.00, while Australia's S&P/ASX 200 fell by 0.8% to 8,646.30.Tan Boon Heng from Mizuho Bank noted that conflicting reports regarding a potential U.S.-Iran agreement have heightened market anxieties. He stated, “Conflicting reports on the contours of a U.S.-Iran deal dampened risks sentiments as markets grow increasingly wary about the possibility of a deal.”
U.S. Stock Market Performance
On Wednesday, U.S. stock markets reached new highs, aided by a decline in oil prices, which had dropped over 4%. The S&P 500 edged up by less than 0.1% to 7,520.36, while the Dow Jones Industrial Average rose by 0.4% to 50,644.28. The Nasdaq composite also gained 0.1%, reaching 26,674.73.Companies with high fuel costs benefited from the lower oil prices, with Norwegian Cruise Line Holdings climbing 6.1% and United Airlines increasing by 6.3%. Delta Air Lines saw a 3% rise, achieving an all-time high.
Oil Price Fluctuations
Brent crude oil prices fell by 4.6% to $92.25 following the U.S.-Iran ceasefire, but in early Thursday trading, prices increased by $1.70 to $93.95 per barrel. Similarly, benchmark U.S. crude gained $1.68 to $90.36, recovering from a previous settlement at $88.68.Market analysts noted that prices have stabilized after previously exceeding $100 a barrel, fueled by hopes for a resolution in the Strait of Hormuz, which would allow oil tankers to resume deliveries.
