Asian stocks moved in a flat-to-low range on Thursday amid growing doubts over a tenuous ceasefire in the U.S.-Israel war on Iran, while a rebound in oil prices also kept markets on edge.
Regional markets largely stalled after a major risk-on rally in the prior session, while ESM26 fell 0.2% amid growing uncertainty over the terms of a Pakistan-brokered ceasefire between the U.S. and Iran.
Oil prices rebounded from this week’s losses as the Strait of Hormuz– a key shipping channel that was effectively blocked by Iran– showed few signs of reopening.
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Asia stocks stall amid doubts over Iran ceasefire South Korea’s KOSPI was the worst performer in Asia, down 1.3% on a reversal in chipmaking stocks, while Japan’s Nikkei 225 and TOPIX indexes fell 0.4% and 0.6%, respectively.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes shed about 0.5% each, while Hong Kong’s Hang Seng fell 0.5%, weighed by a 3% loss in Alibaba Group (HK:9988) after Jefferies cut its target price on the stock.
Asian stocks lost steam after Iran said ceasefire talks were “unreasonable” amid continued attacks by Israel on Lebanon. Iranian officials demanded that Lebanon be included in their recent ceasefire proposal– a demand that the U.S. and Israel largely denied.
Iran was also seen leaving the Strait of Hormuz– a key shipping channel for Asian oil and gas supplies– largely closed, with reports indicating that a scant number of ships had passed through since the ceasefire was announced.
U.S. and Iranian officials are set to meet in Pakistan later this week, although the main agenda for their talks, along with more details on the ceasefire, remain largely unclear.
OCBC analysts noted that while news of the ceasefire had initially sparked a risk-on rally, “fragile negotiations and lingering geopolitical risks” limited more upside.
They also noted that oil flows through Hormuz will remain a key market focus in the coming days.
Broader Asian markets dithered on Thursday, amid heightened caution over the Iran war. Most regional markets were also nursing steep losses from March.
Singapore’s Straits Times index fell 0.3%, while Australia’s ASX 200 was flat.
Futures for India’s Nifty 50 index fell slightly after the index rallied nearly 4% on Wednesday. India is among the countries most affected by disruptions in oil and gas supplies due to the Iran war.
