Asian stock markets saw declines on Tuesday, mirroring losses on Wall Street as US equities retreated from recent record highs. Oil prices, after an earlier surge, fell back amid escalating tensions in the ongoing conflict between the US and Iran.
The fragile ceasefire between the US and Iran faced significant challenges on Monday. The US military reported sinking six Iranian small boats, which it claimed were targeting civilian vessels.
Concurrently, two US-flagged ships successfully navigated the Strait of Hormuz, a crucial waterway for oil and gas transport that remains largely closed despite repeated US demands for its reopening. The United States has also imposed a sea blockade on Iranian ports, and US President Donald Trump’s "Project Freedom" plan, designed to guide stranded ships through the Strait of Hormuz, commenced on Monday.
Talks aimed at a permanent end to the conflict have stalled, with tensions further exacerbated after the United Arab Emirates, a US ally, reported coming under attack from Iran for the first time since last month's ceasefire.
ING Bank analysts Warren Patterson and Ewa Manthey noted in a Tuesday brief: "We are seeing the first signs of the ceasefire between the U.S. and Iran breaking down amid a re-escalation in the Persian Gulf." They added that "Continuation of 'Project Freedom' risks further escalation," and warned that "Any relief from stranded vessels making their way through the Strait will be temporary, with very few inbound vessels moving into the Persian Gulf."
Brent crude, the international standard, fell $1.22 to $113.22 per barrel. It surged above $114 a barrel on Monday, gaining nearly 6%. Before the war began in late February, it was trading near $70.
Benchmark U.S. crude slipped $2.08 to $104.34 per barrel.
Regional trading in Asia was thin due to holidays in Japan, South Korea, and mainland China. Hong Kong’s Hang Seng index fell 1.1 per cent to 25,805.98, while Australia’s S&P/ASX 200 lost 0.5 per cent to 8,649.80. Taiwan’s Taiex traded 0.2 per cent lower at 40,626.22. US futures, however, edged 0.1 per cent higher.
On Monday, Wall Street closed lower, with the benchmark S&P 500 slipping 0.4 per cent from its latest record heights to 7,200.75. The Dow Jones Industrial Average fell 1.1 per cent to 48,941.90, and the technology-heavy Nasdaq composite dropped 0.2 per cent to 25,067.80. Shares of GameStop notably sank 10.1 per cent after the company expressed interest in acquiring eBay, which boasts a market value roughly four times its own.
In currency markets, the US dollar rose to 157.27 Japanese yen from 157.25 yen, while the euro traded at 1.1687, down from $1.1689.
