(Sharecast News) - Asia-Pacific markets were mostly lower on Thursday as fresh tensions in the Middle East and concerns over higher oil prices fuelled risk-off sentiment.
"Global equities are under renewed pressure as the tech-led selloff deepens and the US-Iran conflict shows little sign of near-term resolution," said Patrick Munnelly, market strategy partner at TickMill.
"The MSCI All Country World Index fell as much as 0.3%, while Asia-Pacific equities dropped to a three-week low after US military strikes on Iranian targets effectively shattered the April ceasefire."
US Central Command said forces launched further "self-defense strikes" against Iran late Wednesday at the direction of president Donald Trump.
The fragile ceasefire between Washington and Tehran came under renewed pressure after Trump said Iran was taking "too long" to agree to a potential deal and would "pay the price".
He also pledged further strikes, saying the US would be "attacking them very hard."
West Texas Intermediate crude futures initially advanced nearly 3% to trade around $92 a barrel, although oil later moved lower.
Brent crude futures were last down 0.98% on ICE at $92.19 per barrel, while the NYMEX quote for WTI fell 0.79% to $89.32.
"Oil therefore remains a crucial cross-asset variable," Munnelly said.
"Brent near $94 per barrel is not yet a full crisis price, but it is high enough to complicate the macro narrative."
Munnelly said that if the conflict remained contained, central banks could continue to treat the shock as mostly first-round and energy-specific.
"If supply risk rises materially, inflation expectations, real incomes and corporate margins all come under more pressure," he added.
"That would be a much more difficult environment for equities already facing valuation stress."
Most bourses finish choppy day in the red
Japan's Nikkei 225 edged up 0.06% to 64,217.27, while the broader Topix fell 0.45% to 3,830.35.
Toppan Holdings jumped 15.65%, Ajinomoto rose 7.51%, and Kioxia Holdings gained 7.01%.
"Japan adds a further complication," Munnelly said.
"BoJ governor Ueda has been hospitalised and will miss next week's policy meeting.
"A June hike is still expected, but the guidance thereafter is now more uncertain, with deputy governor Uchida set to host the post-meeting press conference."
Munnelly said the decision itself may be straightforward, but the communication could be harder for markets to interpret.
"With USD-JPY near 160.50, the combination of BoJ uncertainty and intervention risk remains uncomfortable," he said.
"Japanese rates markets are also fragile after recent pressure on long-end JGBs."
In China, the Shanghai Composite slipped 0.16% to 3,987.01, while the Shenzhen Component declined 0.68% to 14,851.98.
Inly Media fell 10.02%, Beijing Hanjian Heshan Pipeline lost 10.01%, and China Sports Industry Group dropped 10%.
Hong Kong's Hang Seng Index declined 0.65% to 24,249.29.
Alibaba Group fell 5.37%, ENN Energy lost 5.07%, and J&T Global Express dropped 4.89%.
South Korea's Kospi 100 rose 0.31% to 9,620.93, supported by gains in selected technology names.
SKC climbed 12.81%, Hanmi Semiconductor rose 7.78%, and Netmarble Games added 7.63%.
South Korean retail giant Coupang was reportedly hit with a record fine of KRW 624.7bn over a major data breach and the unauthorised collection of online user activity.
Korea's Personal Information Protection Commission fined the company KRW 423.58bn over a breach that affected more than 37 million users last November, according to Yonhap News Agency, and imposed an additional KRW 201.16bn penalty for unauthorised collection of online user activities.
South Korea's seasonally adjusted unemployment rate was meanwhile unchanged at 2.8% in May.
The economy lost 40,000 jobs during the month, the first decline in employment in 17 months, bringing total employment to 29.120 million.
Job gains #exceeded 200,000 in February and March before slowing to 74,000 in April.
Employment fell in mining and manufacturing, construction, agriculture, forestry and fishing, wholesale and retail trade, and accommodation and food services, while gains were recorded in electricity, transport, communication and finance, and business, personal and public services.
The youth employment rate fell 2.4 percentage points from a year earlier to 43.8%, while the number of unemployed rose by 25,000, or 3.0%, to 878,000. The labour force participation rate rose to 65.2% from 64.9%.
Sydney and Wellington both in the red too
Turning down under, Australia's S&P/ASX 200 fell 0.23% to 8,633.20.
Alcoa Corporation dropped 8.34%, NextDC lost 4.23%, and Nickel Mines declined 4.17%.
New Zealand's S&P/NZX 50 slipped 0.39% to 13,202.16.
Synlait Milk fell 4.65%, Goodman Property Trust lost 2.68%, and Serko declined 2.54%.
Dollar flat-to-stronger against regional peers
In currencies, the dollar was flat against the yen at JPY 160.55, as it rose 0.06% on the Aussie to AUD 1.4295, and gained 0.27% against the Kiwi to change hands at NZD 1.7297.
Munnelly said Wednesday's US CPI report had not added much extra damage, with core CPI rising to 2.9% year on year as expected and headline inflation increasing to 4.2%, also in line with forecasts.
"The message is that the energy shock is feeding directly into headline inflation through fuel prices, but so far there is limited evidence of broader pass-through into other categories," he said.
"That is important for the Fed.
"CPI did not validate an even more aggressive tightening path, but it also did not reverse the repricing triggered by last week's strong labour report."
Reporting by Josh White for Sharecast.com.
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