Military tensions between the US and Iran caused sharp fluctuations in major Asian markets. Investors moved away from risky assets due to rising oil prices and inflationary pressures.
In Japan, the Nikkei 225 index fell nearly 3% intraday amid sell-offs in chip stocks. The index dropped below 63,000 points for the first time since May 22.
By the close, the Nikkei limited its losses, ending down 0.44% at 63,896.82 points. The broader Topix index declined 0.85% to 3,814.97 points.
Inflation Concerns in the Bond Market
The tensions and rising commodity prices also impacted Japan's bond market. The yield on Japan's 10-year government bond rose by 1 basis point to 2.690%.
The 30-year bond yield increased by 2 basis points to 3.870%. Investors priced in the risk that higher energy costs could increase pressure on import-dependent economies like Japan.
Mixed Performance in Asian Stock Markets
South Korea's Kospi index dropped more than 4% intraday but closed down 0.62% at 7,682.53 points. The tech-heavy Kosdaq index remained flat.
Hong Kong's Hang Seng index bucked the trend, rising 0.2% to 24,468.82 points. Shanghai Composite Index fell 0.2% to 3,983.80 points.
Taiwan's Taiex index lost 0.4%. The regional volatility reflected varying degrees of impact from the global risk appetite deterioration across Asia.
Rising Oil Prices
The US reportedly launched new attacks on multiple targets in Iran, raising fears that the fragile ceasefire could collapse completely. While the US described the strikes as self-defense, Iran reported explosions near the Strait of Hormuz.
Explosions were reported near Qeshm, Kargan, and Sirik. Iran's announcement of closing the critical energy transit point, the Strait of Hormuz, heightened global oil supply concerns.
Brent crude oil prices rose 1.57% to $94.56 per barrel. US West Texas Intermediate (WTI) crude increased 1.89% to $91.73, with futures gaining over $3 during the day.
Chip Stocks Under Pressure on Wall Street
US markets were also affected by the overnight selling pressure. The Dow Jones Industrial Average fell 953.33 points to 49,918.78.
The S&P 500 closed down 119.66 points at 7,266.99, while the Nasdaq Composite lost 509.32 points. Selling in semiconductor stocks continued to weigh on the tech-heavy indexes.
