Asia stocks slide on flare-up of Mideast hostilities
· Michael West
Asian stocks fell at the start of trading on Thursday as renewed fighting between the United States and Iran rattled stocks, even as conflicting signs of de-escalation left investors hesitant.
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MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.8 per cent, while S&P 500 e-mini futures slipped 0.4 per cent. Korean shares reopened down 2.0 per cent after a holiday, while Japan’s Nikkei 225 slumped 1.3 per cent.
“Financial markets shifted back into a risk-off mode as the US and Iran exchanged fire again,” analysts from Westpac wrote in a research report.
Stocks on Wall Street tumbled overnight, with the S&P 500 falling 0.7 per cent and oil prices rising around 2.0 per cent as hostilities in the Middle East erupted anew and talks between Tehran and Washington showed little progress.
Traders looked through a better-than-expected US ISM services sector PMI print, which rose in May as businesses pre-emptively placed orders and rebuilt inventories in anticipation of shortages and higher prices because of the war.
Brent crude futures were 0.7 per cent lower at $US97.12 ($A135.91) a barrel as trading resumed on Thursday after Lebanon and Israel agreed to implement a ceasefire, which is contingent on a complete cessation of fire from the Iran-aligned Hezbollah militia and the evacuation of all its operatives from the South Litani Sector. The two sides had agreed in May to a ceasefire but hostilities had continued.
The Republican-led US House of Representatives approved a war powers resolution on Wednesday to block President Donald Trump from continuing the conflict against Iran. The measure is largely symbolic as it must still pass the Senate and would need a two-thirds majority in both chambers to override an almost certain presidential veto.
“Geopolitics continue to drive volatility and as conflicting signals dampen hopes for a quick solution to the conflict,” analysts from ING wrote in a research report.
Broadcom shares plunged more than 13 per cent in extended trading after missing Wall Street expectations for second-quarter revenue on Wednesday, while its top executive left a previous 2027 sales forecast unchanged, in a rare sign that the AI chipmaker may be losing steam.
In the currency markets, the yen was down 0.1 per cent at 159.945 yen per dollar after Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank must discuss the pros and cons of raising interest rates if inflationary risks outweigh downside risks to the economy, in remarks that point to a strong chance of a rate hike later in June.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, held steady at 99.45 after a three-day rally which took the currency to its strongest level since April 7.
The yield on the US 10-year Treasury bond was down 0.4 basis point at 4.485 per cent.
Gold rose 0.5 per cent to $US4,455.71 ($A6,235.16), firmly within the trading channel it has sat in since the middle of last month.
Bitcoin fell 1.3 per cent to $US64,047.39 ($A89,625.68), while ether rose 1.8 per cent to $US1,810.83 ($A2,534.01).