Asian stocks plunged on Tuesday as investors reacted to the ongoing tensions in Iran and its potential impact of regional energy supplies. In Hong Kong, HSI was down 74 points or 0. 29% to 25,985. South Korea’s Kospi index also opened sharply lower after Monday’s holiday, plunging 4. 88% to 5,939.
Shanghai and Shenzhen also fell 0.07% and 1.05% respectively. Japan’s Nikkei 225 declined 2.4% or 1,427 points, landing at 56,629 by 10:10 am.
Analysts noted that Japan, which relies heavily on oil and natural gas shipments through the Strait of Hormuz, could face supply challenges. However, the country’s stockpile of over 200 days of energy means the immediate threat remains limited.
Japanese energy shares were hit particularly hard, with Eneos Corp. falling nearly 6% and Idemitsu Kosan down almost 4%. Defence stocks, which had recently gained on expectations of increased spending under Prime Minister Sanae Takaichi, retreated, with Mitsubishi Heavy Industries down 5% and IHI losing 4%.
Oil prices continued to climb amid concerns over supply disruptions. Benchmark US crude rose 77 cents to $72.00 a barrel, while Brent crude added $1.10 to $78.84 a barrel.
Both contracts remain higher than pre-conflict levels despite Monday’s fluctuations.
On Wall Street trading, airline stocks were among the hardest hit, pressured by rising fuel costs and regional travel disruptions. In Asia, ANA shares fell 2.4%, Japan Airlines dropped 5.2%, Korean Air lost 8.9%, and Qantas Airways declined 2.9%.
On Monday, the S&P 500 fluctuated but ended nearly unchanged at 6,881.62. The Dow Jones Industrial Average dipped 0.1% to 48,904.78, while the Nasdaq rose 0.4% to 22,748.86.
Gold climbed 1.2% as investors sought safer assets, while US officials reassured markets that the conflict is unlikely to be prolonged. Rising oil prices boosted energy stocks, with Exxon Mobil up 1.1% and Marathon Petroleum rising 5.9%. Defence contractors also strengthened: Northrop Grumman climbed 5.9%, RTX gained 4.7%, and Palantir Technologies rose 5.8%. Nvidia led Big Tech gains with a 2.9% increase.
In the bond market, the 10-year Treasury yield rose to 4.04% from 3.97%, aided by stronger-than-expected US manufacturing data. In currencies, the US dollar slipped to 157.32 yen from 157.47 yen, while the euro inched up to $1.1693 from $1.1690.
