Asian stocks fell on Tuesday as investors reacted to ongoing tensions in Iran and their potential impact on regional energy supplies. In Hong Kong, the HSI fell 74 points, or 0.29%, to 25,985.
South Korea’s KOSPI also opened sharply lower after Monday’s holiday, falling 4.88% to 5,939.Shanghai and Shenzhen also fell by 0.07% and 1.05%, respectively. Japan’s Nikkei 225 fell 2.4%, or 1,427 points, to 56,629 by 10:10 a.m. Analysts noted that Japan, which relies heavily on oil and natural gas shipments through the Strait of Hormuz, may face supply challenges. However, the country’s energy reserve of more than 200 days means the immediate threat remains limited.
Shares of Japanese energy companies were particularly affected, with Eneos Corp falling by about 6% and Idemitsu Kosan falling by about 4%. Defense stocks, which had recently risen amid expectations of increased spending under Prime Minister Sanae Takaishi, fell, with Mitsubishi Heavy Industries falling 5% and IHI losing 4%. Oil prices continued to rise amid concerns about supply disruptions. Standard US crude rose 77 cents to $72.00 per barrel, while Brent crude added $1.10 to $78.84 per barrel.
Both contracts remain above pre-conflict levels despite Monday’s volatility. In Wall Street trading, airline stocks were among the hardest hit, under pressure from rising fuel costs and regional travel disruption. In Asia, ANA shares fell 2.4%, Japan Airlines shares fell 5.2%, Korean Air shares lost 8.9%, and Qantas Airlines shares fell 2.9%. On Monday, the S&P 500 fluctuated but ended almost unchanged at 6,881.62. The Dow Jones Industrial Average fell 0.1% to 48,904.78 points, while the Nasdaq rose 0.4% to 22,748.86 points. Gold rose 1.2% as investors sought safer assets, while US officials reassured markets that the conflict was unlikely to last long. The rise in oil prices boosted shares of energy companies, with Exxon Mobil shares rising 1.1% and Marathon Petroleum shares rising 5.9%. Defense contractor stocks also strengthened: Northrop Grumman rose 5.9%, RTX rose 4.7%, and Palantir Technologies rose 5.8%. Nvidia led the big tech companies’ gains with a 2.9% increase. In the bond market, the 10-year Treasury yield rose to 4.04% from 3.97%, supported by stronger-than-expected US manufacturing data. In currencies, the US dollar fell to 157.32 yen from 157.47 yen, while the euro rose to $1.1693 from $1.1690.
