Asia stocks slide on flare-up of Mideast hostilities
Asian shares fell at the start of trading on Thursday as a renewed fight between the United States and Iran rattled stocks and conflicting signs of easing tensions left investors hesitant.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.8 percent, while S&P 500 e-mini futures fell 0.4 percent. While Korean stocks reopened with a 2.0 percent decline after the holiday, Japan’s Nikkei 225 index fell 1.3 percent.
“Financial markets have moved back into risk-averse mode as the US and Iran exchange fire again,” analysts from Westpac wrote in a research report.
Wall Street stocks fell overnight as hostilities in the Middle East reignited and talks between Tehran and Washington made little progress; The S&P 500 fell 0.7 percent and oil prices rose about 2 percent.
Traders saw better-than-expected US ISM service sector PMI output rising in May as businesses pre-ordered and restocked in anticipation of higher prices due to famine and war.
Brent crude futures fell 0.7 per cent to US$97.12 ($A135.91) per barrel on Thursday as trading resumed after Lebanon and Israel agreed to a ceasefire conditioned on a complete cessation of fire by the Iran-allied Hezbollah militia and the evacuation of all workers in the Southern Litani Zone. The two sides agreed on a ceasefire in May, but clashes continued.
The Republican-led U.S. House of Representatives on Wednesday approved a war powers resolution to prevent President Donald Trump from continuing the conflict against Iran. The measure is largely symbolic because it still must pass the Senate and would require a two-thirds majority in both chambers to override an almost certain presidential veto.
“Geopolitics continues to increase volatility and conflicting signals undermine hopes for a quick resolution to the conflict,” ING analysts wrote in a research report.
Broadcom shares tumbled more than 13 percent in extended trading after it missed Wall Street’s second-quarter revenue expectations on Wednesday, while its top executive kept its previous 2027 sales forecast unchanged in a rare sign that the AI chip maker is losing steam.
The yen fell 0.1 percent in currency markets to 159.945 yen per dollar after Bank of Japan Governor Kazuo Ueda said on Wednesday that the central bank should discuss the pros and cons of raising interest rates if inflationary risks outweigh downside risks to the economy.
The US dollar index, which measures the greenback’s strength against six currencies, was steady at 99.45 after a three-day rally that lifted the currency to its strongest level since April 7.
The yield on the US 10-year Treasury note fell 0.4 basis points to 4.485 percent.
Gold rose 0.5 per cent to US$4,455.71 ($A6,235.16), remaining firmly in the trading channel it has been in since the middle of last month.
Bitcoin fell 1.3 per cent to $64,047.39 ($A89,625.68), while Ethereum rose 1.8 per cent to $1,810.83 ($A2,534.01).
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