Asia report: Most markets fall as Hormuz remains blockaded

(Sharecast News) - Asia-Pacific markets mostly ended lower on Thursday as escalating tensions in the Middle East overshadowed earlier optimism driven by a US ceasefire extension with Iran.

Patrick Munnelly, market strategy partner at TickMill, noted that "markets turned more cautious on Thursday, with equities and bonds under pressure as stalled US-Iran negotiations and the continued closure of the Strait of Hormuz pushed oil higher and revived concerns about the growth-inflation trade-off."

Regional equities gave up early gains after reports that the US military had intercepted at least three Iranian-flagged oil tankers in Asian waters, redirecting them away from positions near India, Malaysia and Sri Lanka.

The move, alongside Iran's earlier seizure of two container ships in the Strait of Hormuz, raised concerns that the conflict could drag on. Investor sentiment had initially been supported by US president Donald Trump's decision to extend a two-week ceasefire, citing Tehran's "seriously fractured" government.

"Based on the fact that the Government of Iran is seriously fractured, not unexpectedly so and, upon the request of Field Marshal Asim Munir, and Prime Minister Shehbaz Sharif, of Pakistan, we have been asked to hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal," Trump wrote.

However, uncertainty persisted after Iranian negotiators reportedly declined to attend talks, calling them a "waste of time," while US vice president JD Vance paused plans to join negotiations.

Reflecting the shift in tone, Munnelly said "the tone shifted overnight as investors reassessed how durable the ceasefire really is in the absence of diplomatic progress," adding that "the MSCI Asia Pacific index fell 0.6%, with losers outnumbering gainers by roughly 3:1."

Most bourses close lower amid flurry of data

In Japan, the Nikkei 225 fell 0.75% to 59,140.23 and the Topix slipped 0.76% to 3,716.38, with stocks such as Nikon down 10.36%, BayCurrent losing 9.73% and Konica Minolta declining 6.7%.

Data showed manufacturers ramped up output to a 12-year high, with the S&P Global factory PMI rising to 55.4 in April, the strongest since February 2014, while the broader manufacturing index reached 54.9.

Services activity, however, eased to 51.2 from 53.4.

Chinese markets also declined, with the Shanghai Composite down 0.32% to 4,093.25 and the Shenzhen Component falling 0.88% to 15,043.45.

Shares including Nuode Investment, China Rare Earth Nonferrous Metals and Tibet Summit Resources each dropped 10%.

In Hong Kong, the Hang Seng Index lost 0.95% to 25,915.20, led lower by Innovent Biologics, down 5.9%, Geely Automobile, off 4.98%, and BYD Electronic International, which fell 4.68%.

South Korea was a regional outperformer, with the Kospi 100 rising 1.21% to 7,499.21.

Gains were led by LS Industrial Systems, up 11.74%, GS Holdings, up 8.47%, and Samsung Heavy Industries, up 6.92%.

The country's economy expanded 1.7% in the first quarter, the fastest pace in nearly six years and well above the 1.0% forecast in a Reuters poll, driven by a 5.1% jump in exports, particularly semiconductors linked to artificial intelligence infrastructure.

However, risks from the Middle East conflict remain significant, with policymakers warning of potential inflationary pressures.

Consumer sentiment deteriorated sharply, with the composite consumer sentiment index falling to 99.2 in April from 107.0, dropping below the neutral 100 mark for the first time since early 2025 as energy price concerns and volatility weighed on confidence.

Sydney, Wellington stock markets in the red

Down under, Australia's S&P/ASX 200 fell 0.57% to 8,793.40, with Temple & Webster Group down 8.18%, Lynas Rare Earths off 6.7% and Perenti Global losing 6.28%.

Data showed a modest rebound in services activity, with the S&P Global services PMI business activity index rising to 50.3 in April from 46.3, though demand remained subdued due to weak client confidence.

Across the Tasman Sea, New Zealand's S&P/NZX 50 declined 0.47% to 12,884.93, with KMD Brands down 4.69%, Eroad falling 3.06% and Fisher & Paykel Healthcare losing 2.95%.

Dollar strengthens as oil prices advance

In currency markets, the dollar strengthened, rising 0.14% on the yen to trade at JPY 159.71, as it gained 0.26% against the Aussie to AUD 1.4002, and advanced 0.49% on the Kiwi to change hands at NZD 1.7020, with Munnelly noting that "the dollar also firmed against most major peers, consistent with a more defensive market tone."

Oil prices moved higher amid supply concerns, with Brent crude futures last up 1.44% on ICE at $103.38 per barrel, and the NYMEX quote for West Texas Intermediate gaining 1.57% to $94.42.

Munnelly added that "oil remains the central macro-transmission channel" and that "higher oil is now starting to weigh more visibly on both equities and rates as investors confront the possibility that persistent energy stress could undermine growth while simultaneously adding to inflation pressure."

Reporting by Josh White for Sharecast.com.