(Sharecast News) - Asia-Pacific markets fell on Thursday as investors assessed a fragile ceasefire between the US and Iran, with renewed tensions undermining risk sentiment and pushing oil prices higher.
As Patrick Munnelly, market strategy partner at TickMill, put it, "Stocks retreated while oil prices stubbornly climbed as the initial euphoria surrounding the US-Iran ceasefire rapidly dissipated."
The regional pullback followed comments from Iran's parliamentary speaker Mohammed Bagher Ghalibaf, who accused the US of breaching the terms of a two-week ceasefire agreement announced a day earlier by US president Donald Trump.
Trump had said he would "suspend the bombing and attack of Iran for a period of two weeks," describing a 10-point proposal from Tehran as a "workable basis" for negotiations.
The agreement was contingent on Iran reopening the Strait of Hormuz, with Tehran signalling it would halt "defensive" operations if attacks ceased.
However, Ghalibaf cited violations including restrictions on uranium enrichment, Israel's continued strikes on Lebanon and a drone incursion into Iranian airspace, casting doubt over the durability of the truce.
Munnelly noted that "Tehran's announcement of several critical violations in the agreement underscored the persistent uncertainty gripping global markets," adding that markets are "once again pricing the fragility of the temporary truce."
Markets in the red across Asia
In Japan, the Nikkei 225 fell 0.73% to 55,895.32, while the Topix declined 0.9% to 3,741.47.
Losses were led by Aeon, down 8.19%, Socionext, which dropped 5.23%, and Mitsui Chemicals, off 5.19%.
Domestic data highlighted mounting economic concerns, with sentiment among multi-person households plunging to 33.3 in March from a revised 39.7, marking the sharpest deterioration since April 2020, according to a Cabinet Office report.
The proportion of households expecting higher inflation over the next year rose to 93.1%, the highest since September.
The figures underscored the impact of Middle East tensions on consumer confidence, with elevated oil prices posing a particular risk to Japan's import-reliant economy.
Gasoline prices hit a three-decade high last month before easing slightly due to government subsidies, while a separate report showed merchants' outlook falling to its lowest level since December 2020.
Chinese markets also declined, with the Shanghai Composite down 0.72% at 3,966.17 and the Shenzhen Component slipping 0.33% to 13,996.27.
Jiangyin Hengrun Heavy Industries fell 7.43%, Huadian Liaoning Energy Development dropped 7.03%, and China Railway Tielong Container Logistics lost 6.87%.
In Hong Kong, the Hang Seng Index eased 0.54% to 25,752.40, weighed by declines in Longfor Properties, down 5.59%, Alibaba Health Information Technology, which fell 5.1%, and BYD, off 4.68%.
South Korea's Kospi 100 recorded the steepest losses in the region, falling 2.06% to 6,654.09.
Kia Corporation dropped 5.46%, Coway declined 4.48%, and Korea Zinc fell 3.72%.
Australasian bourses manage gains
In contrast, Australian and New Zealand markets posted modest gains.
Australia's S&P/ASX 200 rose 0.24% to 8,973.20, supported by strength in financials and energy stocks, with Bendigo and Adelaide Bank up 8.41%, ASX Ltd gaining 6.63%, and Woodside Energy advancing 3.96%.
Across the Tasman Sea, New Zealand's S&P/NZX 50 edged up 0.15% to 13,273.81, with Sanford rising 4.02%, Serko up 3.93%, and Vista Group International adding 3.49%.
Dollar mixed as oil prices climb again
Currency markets were mixed, with the dollar last up 0.28% on the yen to trade at JPY 159.01 and gaining 0.19% against the Aussie to AUD 1.4223, while it slipped 0.21% on the Kiwi to change hands at NZD 1.7140.
Munnelly added that "this reversal has also pushed US Treasury yields and the Dollar Index off yesterday's lows, while Asian equities have turned lower again."
Oil prices moved higher amid ongoing uncertainty over supply routes through the Strait of Hormuz, with Brent crude futures last up 3.6% on ICE at $98.16 per barrel, and the NYMEX quote for West Texas Intermediate climbing 4.5% to $98.66.
As Munnelly noted, "ongoing uncertainty around the security of vessels transiting the Strait of Hormuz is adding to the tension," while "the oil price itself is not the only signal of supply fears; the Brent-WTI spread also reflects market stress."
Reporting by Josh White for Sharecast.com.
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