Shares across most major Asian markets reversed earlier gains on Thursday as mounting geopolitical risks in the Middle East led to a wave of investor caution. Fresh concerns surrounding regional stability prompted a retreat in equity indices after an initial rally driven by strong earnings and encouraging economic data.
At the start of the session, Japan’s Nikkei 225 and South Korea’s Kospi each reached record intraday highs, supported by another strong showing from Wall Street and an earlier extension of a U.S.-brokered ceasefire.
Market sentiment shifted quickly, however, following reports that U.S. naval forces intercepted at least three Iranian-flagged oil tankers in waters near India, Malaysia, and Sri Lanka. The rerouting of these ships forms part of a broader campaign by the U.S. military to curb Iranian maritime commerce.
This development comes in close succession to statements from Iran’s navy indicating it had detained two container vessels in the Strait of Hormuz, a vital global route for energy shipments, responsible for about a fifth of worldwide oil and gas movement.
The increased tensions and stepped-up enforcement efforts have contributed to a rise in energy prices, sending Brent crude above $100 a barrel once again. Investor sentiment has been further undermined by indications that the regional standoff may endure, as Iranian media dismissed additional negotiations as futile, following the latest U.S. ceasefire extension aimed at advancing dialogue.
Amid these crosscurrents, the Nikkei 225 retreated more than 1% from its peak, Kospi lost as much as 1.7% before paring loss to now slightly above the flatline, Hong Kong’s Hang Seng declined 1.08%, and China’s Shanghai Composite shed 0.64%. Meanwhile, Thailand’s SET Index dropped 1.4% at the closing of the morning session. Despite ongoing positive signals from local economies—such as stronger manufacturing activity in Japan and 1.7% quarterly GDP growth in South Korea—upbeat fundamentals are being overshadowed by renewed regional risks. As U.S. forces maintain the maritime blockade, concerns for global energy supplies continue to weigh, amplifying volatility across Asian stocks.
