Market nervousness increased after the United States carried out strikes on Iran following claims by President Donald Trump that Tehran had brought down a US Apache helicopter near the Strait of Hormuz. The developments added to worries surrounding an already fragile ceasefire and heightened geopolitical risks.
MSCI’s broad Asia-Pacific index excluding Japan declined 0.6%. Japan’s Nikkei dropped 0.9%, while South Korea’s technology-heavy Kospi fell 2% amid a turbulent period for AI-linked stocks, which have been facing sustained selling pressure.
Crude oil prices rose around 1% in early trade, recovering further from the seven-week low recorded in the previous session after the latest US military action. Brent crude gained 0.9% to reach $92.29 a barrel, while US West Texas Intermediate (WTI) crude advanced 0.8% to $88.97 a barrel.
“Geopolitics is being treated as a headline risk, not a macro shock for now,” said Charu Chanana, Chief Investment Strategist at Saxo in Singapore.
She noted that oil remaining near the $90 mark despite fresh developments involving Iran suggests traders are not yet factoring in a prolonged supply disruption. However, she added that markets could react much more sharply if energy infrastructure, shipping lanes or direct US involvement were to escalate further.
US equities closed lower overnight after an early recovery in technology shares lost momentum. Investor sentiment was weighed down by concerns over AI-related valuations, escalating tensions in the Middle East and growing expectations of higher interest rates, prompting a move away from riskier assets.
