Military tensions between the US and Iran triggered sharp fluctuations in major Asian markets. Investors moved away from risky assets due to rising oil prices and inflationary pressures.
In Japan, the Nikkei 225 index fell nearly 3% intraday amid sell-offs in chip stocks. The index dropped below 63,000 points for the first time since May 22.
By the close, the Nikkei limited its losses, ending down 0.44% at 63,896.82 points. The broader Topix index declined 0.85% to 3,814.97 points.
Inflation concerns in the bond market
The tensions and rising commodity prices also impacted Japan’s bond market. The yield on Japan’s 10-year government bond rose by 1 basis point to 2.690%.
The 30-year bond yield increased by 2 basis points to 3.870%. Investors priced in the risk that higher energy costs could increase pressure on import-dependent economies like Japan.
Mixed performance in Asian stock markets
South Korea’s Kospi index dropped more than 4% intraday but closed down 0.62% at 7,682.53 points. The tech-heavy Kosdaq index remained flat.
Hong Kong’s Hang Seng index bucked the trend, rising 0.2% to 24,468.82 points. Shanghai Composite fell 0.2% to 3,983.80 points.
Taiwan’s Taiex index lost 0.4%. The regional volatility reflected varying degrees of risk appetite deterioration across Asia.
Oil prices on the rise
On the US side, new attacks targeted multiple sites in Iran, raising fears that the fragile ceasefire could completely collapse. The US described the strikes as self-defense, while Iran reported explosions near the Strait of Hormuz.
Explosions were reported near Qeshm, Kargan, and Sirik. Iran’s announcement of closing the critical energy transit point at the Strait of Hormuz intensified global oil supply concerns.
Brent crude oil prices rose 1.57% to $94.56 per barrel. US West Texas Intermediate (WTI) crude increased 1.89% to $91.73, with futures gaining over $3 during the day.
Chip stocks under pressure on Wall Street
US markets were also affected by the overnight selling pressure. The Dow Jones Industrial Average fell 953.33 points to 49,918.78.
The S&P 500 closed down 119.66 points at 7,266.99, while the Nasdaq Composite lost 509.32 points. Selling in semiconductor stocks continued to weigh on tech-heavy indexes.
