Asia report: Markets mixed as oil prices stay high

(Sharecast News) - Asia-Pacific markets traded mixed on Monday as investors assessed elevated oil prices and escalating tensions between the United States and Iran, with energy markets remaining the dominant influence on regional sentiment.

As Patrick Munnelly, market strategy partner at TickMill, noted, "global equity markets showed signs of stabilization, while oil prices retreated from earlier highs after president Donald Trump urged international cooperation to ensure safe passage through the Strait of Hormuz," adding that the MSCI All Country World Index "held steady after three straight days of declines" while "Asian markets edged up by 0.1%."

Oil prices stayed volatile amid the geopolitical backdrop.

Brent crude futures were last up 0.34% on ICE at $103.49 per barrel, while the NYMEX quote for West Texas Intermediate fell 1.06% to $97.66, after briefly topping $100 earlier as Washington considered further military action against Iran.

US president Donald Trump ordered strikes on Iranian military assets on Kharg Island on Friday and warned of additional attacks targeting crude facilities on the island, a strategically vital export hub often described as Iran's "oil lifeline."

Mike Waltz, the US ambassador to the United Nations, reiterated the warning on Sunday.

Analysts at Goldman Sachs said the surge in energy prices linked to the war in Iran could shave around 0.3% off global GDP over the next year while pushing headline inflation higher by roughly 0.5% to 0.6%, adding that higher natural gas prices could intensify inflationary pressure and growth headwinds, particularly in Europe and Asia, especially if the Strait of Hormuz remains closed.

Munnelly said oil markets had remained highly reactive to developments in the region, noting that "Brent crude [was] hovering around $104 per barrel after briefly spiking to $106.50," while West Texas Intermediate "remained below the $99 mark, reflecting a more subdued response."

He added that Iranian foreign minister Abbas Araghchi had clarified that the Strait of Hormuz was restricted only to vessels from "enemy" nations, while "two tankers carrying liquefied petroleum gas successfully navigated the critical waterway en route to India, which handles approximately 20% of global oil shipments."

Markets mixed across Asia

In Japan, the Nikkei 225 edged down 0.13% to 53,751.15 while the broader Topix slipped 0.5% to 3,610.73.

Tokyo Electric Power Company fell 4.76%, Isuzu Motors dropped 4.37%, and Furukawa Electric declined 4.19%.

Mainland Chinese markets were subdued despite stronger-than-expected economic data.

The Shanghai Composite slipped 0.26% to 4,084.79 while the Shenzhen Component rose 0.19% to 14,307.58.

Power Construction Corp of China dropped 10.01%, Gansu Jiu Steel Group Hongxing Iron & Steel fell 9.91%, and Datang International Power Generation Co lost 8.65%.

Official data showed China's retail sales rose 2.8% year-on-year in the combined January-February period, accelerating from a 0.9% increase in December and beating market expectations of a 2.5% gain.

The rise marked the strongest growth since October as holiday spending lifted demand, with sharp increases in grains, oil and food products, clothing and textiles, and a rebound in home appliances and audio-visual equipment.

Sales of tobacco and alcohol also surged, while declines continued for automobiles and petroleum-related products.

China combines January and February retail figures to smooth distortions caused by the shifting timing of the Lunar New Year.

Industrial production in China also surprised to the upside, rising 6.3% year-on-year in the January-February period compared with 5.2% growth in December and above expectations of 5.1%.

Activity strengthened across mining, manufacturing and utilities, with growth in 35 of the country's 41 major industrial sectors, including strong output gains in computers and communications equipment, railway and shipbuilding, general and special equipment, electrical machinery and chemicals.

On a monthly basis, industrial output increased 0.83%, while production across 2025 rose 5.9%.

Hong Kong's Hang Seng Index outperformed regional peers, climbing 1.45% to 25,834.02 as technology and electric vehicle stocks rallied.

Contemporary Amperex Technology jumped 7.89%, BYD gained 7.8%, and Xiaomi rose 5.64%.

South Korea also posted solid gains, with the Kospi 100 rising 1.87% to 6,365.93.

SK Hynix surged 7.03%, SK Square advanced 5.24%, and Korea Aerospace added 4.65%.

Equities in the red down under

In Australia, the S&P/ASX 200 fell 0.39% to 8,583.40, led lower by sharp declines in several resource names.

IperionX plunged 22.24%, Regis Resources dropped 8.33%, and Stanmore Coal slid 6.64%.

Across the Tasman Sea, New Zealand's S&P/NZX 50 slipped 0.17% to 13,164.58.

KMD Brands fell 12.77%, Vista Group International lost 7.69%, and Tourism Holdings declined 3.45%.

Dollar weakens against regional peers

Currency markets saw the dollar weaken against several regional peers, last trading down 0.31% on the yen at JPY 159.24, as it fell 0.88% against the Aussie to AUD 1.4199, and declined 1.04% on the Kiwi to change hands at NZD 1.7140.

Munnelly said the softer currency tone reflected improving risk sentiment, noting that "the dollar, which had gained traction as a safe-haven asset amid Middle East tensions, softened against most major currencies," with the DXY index slipping 0.2%.

Looking ahead, Munnelly said investors were also preparing for a busy week of global monetary policy decisions.

"In the coming week, eight central bank decisions will take place within the G10 space, with the Reserve Bank of Australia (RBA) being the only one anticipated to raise rates," he said, adding that policymakers' guidance would likely remain cautious as officials assess the inflationary implications of higher energy prices.

He noted that the Federal Reserve and the European Central Bank would publish updated projections, while the Bank of England was expected to emphasise uncertainty and maintain a measured approach, with oil near $100 per barrel complicating the outlook for rate cuts.

Reporting by Josh White for Sharecast.com.