Asian markets opened cautiously on Tuesday, with traders monitoring both oil and geopolitics.
Tensions between the United States and Iran continued to disrupt global markets.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3% at the start of the session, while the Australian benchmark index lost 0.4%.
With Japan and South Korea closed for holidays, the session was thin and prone to amplified movements.
Fragile opening of Asian markets in a low-liquidity session linked to public holidays
The market backdrop at the start of the Asian session was one of caution.
In North Asia, the tone was mixed rather than uniformly weak.
Hong Kong’s Hang Seng index lost about 1.3%, making it one of the worst performers in the region, as global risk sentiment weighed.
On the other hand, the CSI 300 of mainland China was little changed, reflecting a more contained reaction from domestic investors.
Investors were digesting the rise in oil prices the day before, the latest developments in the Strait of Hormuz and the possibility that the conflict would continue to fuel inflation.
The renewed hostilities in the Gulf were a stark reminder that the war in the Middle East was far from over.
This partly explains why the decline in stocks has remained moderate. This was not a massive sell-off, but rather a pause in the market to reassess the situation.
When trading is lightened by holidays, investors are often less inclined to follow moves in one direction or the other.
This makes the opening fragile, but also means that any new information about supply disruptions, diplomacy or military escalation can move prices quickly.
Oil prices remain high
The real pressure point for the markets remained the price of crude oil.
Brent futures fell 0.5% to $113.85 a barrel and US crude fell 1.3% to $105.03, but both indexes remained well above $100 after a sharp rise during the session. previous.
That matters because rising oil prices reignite inflation fears, complicating rate expectations and raising the risk that higher energy costs will weigh on growth.
Markets don’t need another explosive move in crude to remain worried.
Even a slight pullback can keep traders on edge if the underlying threat has not disappeared.
In this case, the market’s concern is not just about the price of oil, but the possibility of an interruption of supply via a vital shipping route.
Nervousness around the yen adds an extra layer of caution
The foreign exchange markets added a second source of concern: the Japanese yen briefly jumped during the previous session, reviving speculation on a possible intervention by Tokyo, before stabilizing around 157.22 per dollar.
Japanese Finance Minister Satsuki Katayama warned against speculative trading in the foreign exchange market, keeping traders on alert for further action if the yen weakens again.
This matters for Asian stocks because a volatile yen can ripple through exporters, bond markets and, more broadly, regional sentiment.
In a session already clouded by oil and geopolitics, this was another reason to avoid aggressive positions.
Even outside Japan, demand for safe havens was evident in the dollar and in the measured tone of futures markets, which were also slightly lower.
