Asian Markets Decline Amid Rising Oil Prices Following US Military Strikes Against Iran

Global Markets React to US-Iran Conflict

Asian shares largely declined on Thursday following a series of defensive strikes by the US military against Iran. The US Central Command forces shot down four Iranian one-way attack drones near the Strait of Hormuz, which posed a threat to the area. The US military also targeted an Iranian ground control station in Bandar Abbas that was preparing to launch a fifth drone.

President Donald Trump stated that Iran is "negotiating on fumes" and that the upcoming November midterm elections in the United States will not prompt him to rush into a deal to end the nearly three-month-old conflict.

In early Asian trading, Japan's Nikkei 225 edged up by a small margin, increasing by less than 0.1 percent to 65,039.78. In contrast, the Kospi in South Korea lost 1.2 percent to 8,126.67. Hong Kong's Hang Seng index declined by 1.9 percent to 24,855.86, while the Shanghai Composite index fell 0.3 percent to 4,080.00.

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The S and P/ASX 200 in Australia declined 0.8 percent to 8,646.30, while Taiwan's Taiex gained 0.6 percent. Despite the decline in Asian markets, oil prices surged, with a barrel of Brent crude oil rising by USD 1.70 to USD 93.95 in early Thursday trading.

The sharp increase in oil prices follows a decline of over 4 percent on Wednesday, which had eased pressure on consumers and businesses worldwide. US stocks had inched to new records on Wednesday, with the S and P 500 edging up by less than 0.1 percent to 7,520.36. The Dow Jones Industrial Average rose 0.4 percent to 50,644.28, and the Nasdaq composite gained 0.1 percent to 26,674.73.

Stocks of companies with high fuel costs, such as Norwegian Cruise Line Holdings, United Airlines, and Delta Air Lines, led the way on hopes that lower oil prices will remove a significant drag on their profits. Norwegian Cruise Line Holdings climbed 6.1 percent, and United Airlines rallied 6.3 percent.

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The price for a barrel of Brent crude oil had fallen 4.6 percent to USD 92.25 on Wednesday, but the ceasefire between the United States and Iran appeared to hold despite the US military launching strikes in southern Iran. A barrel of benchmark US crude gained USD 1.68 to USD 90.36, after having fallen 5.5 percent to USD 88.68 on Wednesday.

The US dollar rose to 159.57 Japanese yen from 159.51 yen, while the euro slipped to USD 1.1611 from USD 1.1626 in other dealings early Thursday.