Tokyo, Mar 23: Asian shares dipped Monday, as oil prices continued to climb after US President Donald Trump’s latest comments dashed hopes for an early end to the war in Iran.
Japan’s benchmark Nikkei 225 dropped 3.5 per cent to 51,511.75 in afternoon trading. In Taiwan, the Taiex shed 2.5 per cent to 32,722.50. Australia’s S&P/ASX 200 fell 0.7 per cent to 8,365.90.
South Korea’s Kospi dove 6.5 per cent to 5,404.77. Hong Kong’s Hang Seng slipped 4.0 per cent to 24,279.23, while the Shanghai Composite declined 3.7 per cent to 3,811.62.
Trump over the weekend warned the US will “obliterate” Iran’s power plants if it doesn’t fully open the Strait of Hormuz within 48 hours, prompting Tehran to say it would respond to any such strike with attacks on US and Israeli energy and infrastructure assets in the region.
“Trump’s ultimatum and Iran’s retaliatory warnings point to a widening conflict that keeps energy disruption and market volatility elevated with no clear off-ramp in sight,” said Ng Jing Wen, analyst at Mizuho Bank in Singapore.
Higher oil prices, which also shook stock markets on Friday, dashed hopes for a possible upcoming cut to interest rates by the Federal Reserve, analysts said.
Before the war, traders were betting that the Fed would cut rates at least twice this year. Central banks in Europe, Japan and the United Kingdom also recently held their interest rates steady.
The S&P 500 fell 1.5 per cent Friday to close its fourth straight losing week, its longest such streak in a year. The Dow Jones Industrial Average dropped 443 points, or 1 per cent, and the Nasdaq composite tumbled 2 per cent.
In energy trading, benchmark US crude added USD 1.76 to USD 99.99 a barrel. Brent crude, the international standard, gained USD 1.15 to USD 113.34 a barrel. The price of Brent crude has zigzagged lately from about USD 70 per barrel before the war began to as high as USD 119.50.
On Wall Street, roughly three out of every four stocks in the S&P 500 fell on Friday. Stocks of smaller companies, which can feel the pinch of higher interest rates more than their bigger rivals, led the way lower. The Russell 2000 index of smaller stocks fell a market-leading 2.3 per cent.
All told, the S&P 500 fell 100.01 points to 6,506.48. The Dow Jones Industrial Average dropped 443.96 to 45,577.47, and the Nasdaq composite sank 443.08 to 21,647.61.
In the bond market, the yield on the 10-year Treasury finished last week with a jump to 4.38 per cent Friday from 4.25 per cent late Thursday and from just 3.97 per cent before the war started.
The two-year Treasury yield, which more closely tracks expectations for what the Fed might do, rose to 3.88 per cent from 3.79 per cent.
In currency trading, the US dollar rose to 159.53 Japanese yen from 159.22 yen. The euro cost USD 1.1526, down from USD 1.1571. (AP)
