Asian stocks fell on Thursday, reversing course after a strong start to April as U.S. President Donald Trump flagged an escalation in the Iran war over the coming two-three weeks.
South Korea’s KOSPI was the worst performer after logging strong gains in the past session, while Japanese shares also clocked deep losses.
Regional markets had initially taken some positive cues from a positive overnight session on Wall Street. But S&P 500 Futures slid over 1% after Trump’s comments.
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KOSPI, Nikkei lead losses after Trump flags Iran war escalation
South Korea’s KOSPI was the worst performer in Asia, losing 3.7%, while Japan’s Nikkei 225 and TOPIX indexes fell 2% and 1.2%, respectively.
Japanese and South Korean stocks largely reversed a strong rebound seen in the prior session, and headed back towards lows seen in March.
The two had headlined a rebound in Asian markets on Wednesday following bruising losses in March.
Risk appetite rapidly soured after Trump said the U.S. will ramp up its military actions against Iran over the next two-three weeks, quashing earlier hopes for a de-escalation in the war.
Trump said the U.S. will hit Iran “extremely hard” in the coming weeks, and called on Tehran to either accept a ceasefire or face American strikes on its electricity infrastructure.
Speaking on the Strait of Hormuz, Trump indicated that the U.S. will not push to reopen the crossing, and called on the countries that depend on Hormuz to either buy oil from the U.S. or reopen the passage themselves.
Asia stocks slide in face of continued Iran-related disruptions Broader Asian markets fell on Thursday, reversing course after a strong rebound in the prior session.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.7% and 0.5%, respectively, while renewed losses in tech dragged the Hang Seng down 1%.
Australia’s ASX 200 fell 1.1%, showing little reaction to stronger-than-expected trade balance data for February, which showed an outsized jump in exports.
Singapore’s Straits Times index fell 0.7%, while futures for India’s Nifty 50 index slid 1.6%.
Oil prices jumped as much as 5% after Trump’s comments, as markets saw little relief from ongoing disruptions in energy markets. Hormuz is a key source of oil and gas shipments for several major Asian economies.
Rising oil prices are also expected to factor into higher inflation over the coming months– a trend that could elicit a more hawkish stance from major global central banks.
