Asia report: Markets fall amid fresh Middle East unrest

The incident triggered a surge in oil and gold prices, impacting investor sentiment globally.

“Global markets were rattled by fresh unrest in the Middle East, leading to a decline in stocks while safe-haven assets like Treasury bonds and the dollar saw a surge in value,” said TickMill market analyst Patrick Munnelly.

“According to sources from the US, these movements were in response to Israel's missile attack on Iran, which occurred shortly after Tehran's rocket and drone attacks.

“This raised concerns about a broader conflict in the Middle East; however, some of the risk-off swings in the markets were reversed when Iran assured the safety of its Isfahan nuclear plant.”

Munnelly noted that the price of oil surged by more than 4%, while the credit default swaps index for Asia outside Japan saw its largest daily increase in over eight months.

“Futures contracts for the S&P 500 and Nasdaq 100 dropped by over 1% after the actual benchmarks experienced a sixth consecutive day of decline on Thursday, as expectations of a Federal Reserve interest rate cut were adjusted.

“Asian stocks, including those in Japan and Hong Kong also posted losses of circa 1%.

“It is noteworthy that markets have recovered from overnight lows as the situation hasn’t escalated with Iranian officials claiming there is no plan for immediate retaliation.”

Markets in the red across the region

In Japan, the Nikkei 225 dropped by 2.66%, closing at 37,068.35, while the Topix fell by 1.91% to 2,626.32.

Leading the losses on Tokyo’s benchmark was Tokyo Electron, down 8.74%, followed by Lasertec with a fall of 8.42%, and Dainippon Screen Manufacturing, which lost 6.95%.

In China, Shanghai Composite declined 0.29% to 3,065.26, and the Shenzhen Component fell by 1.04% to 9,279.46.

Notable losers in Shanghai included Guangdong DFP New Material Group, down 9.69, and China Citic Bank, off 8.57%.

Hong Kong's Hang Seng Index retreated by 0.99% to 16,224.14, led lower by Li Auto, down 7.4%; Sunny Optical Technology, off 4.93%; and Sands China, which was 4.66% weaker.

In South Korea, the Kospi index dropped 1.63% to 2,591.86, with SK Square and SK Hynix among the major losers, falling 9.08% and 4.94%, respectively.

The S&P/ASX 200 in Australia declined by 0.98% to 7,567.30, with Karoon Energy down 5.41% and Pinnacle Investment Management losing 5.03% by the end of trading in Sydney.

New Zealand's S&P/NZX 50 slipped 0.34% to 11,796.21, as KMD Brands lost 3.64% and Westpac Banking Corporation fell 3.44%.

In currency markets, the dollar was last down 0.16% on the yen, changing hands at at JPY 154.39.

Meanwhile, the greenback strengthened slightly against its downunder counterparts, rising 0.08% on the Aussie to AUD 1.5585, while it advanced 0.19% against the Kiwi to change hands at NZD 1.6976.

On the oil front, Brent crude futures were last up 0.3% on ICE to $87.37 per barrel, while the NYMEX quote for West Texas Intermediate increased 0.36% to $83.03.

Inflation slows in Japan in March

In economic news, Japan’s headline inflation rate for March came in at 2.7%, a slight decrease from the 2.8% recorded in February.

Core inflation, a key indicator closely monitored by economists, remained steady at 2.6%, aligning with expectations from analysts surveyed by Reuters.

That figure marked a decrease from February's 2.8%.

Of particular note was the ‘core-core’ inflation metric, used by the Bank of Japan, which tracks price changes excluding fresh food and energy.

In March, that stood at 2.9%, down from 3.2% in February, and marking the first time since November 2022 that the index dipped below the 3% threshold.

Reporting by Josh White for Sharecast.com.