Asian stock markets decline, slim hopes for easing Iran tensions lead to losses this week

Investing.com - On Friday, most Asian stock markets declined as the market remained tense due to little sign of easing in the US-Israel conflict with Iran, with inflation effects from the conflict becoming a major concern.

Asian markets received a weak opening signal from Wall Street, as US stocks fell sharply overnight amid fears that energy-driven inflation will prevent the Federal Reserve from cutting rates in the near term.

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As of 10:12 PM Eastern Time (2:12 AM Beijing Time), the S&P 500 futures rose 0.4%, and oil prices also declined during Asian trading hours after the US announced additional exemptions on Russian oil to offset supply shocks from the Iran conflict.

Oil prices have remained strong this week, with Brent crude staying near $100 per barrel, while most Asian stock markets have declined this week.

Japan and South Korea lead declines, Iran concerns persist

The Nikkei 225 and KOSPI indices in Japan and South Korea were the worst performers of the day, each down about 1.2%. The broader Tokyo Stock Exchange Index fell 0.6%.

The Nikkei was also weighed down by Honda Motor Co. (TYO:7267), which dropped over 6% after the Japanese automaker forecasted its first-ever annual loss due to restructuring costs in its electric vehicle business.

The Nikkei declined 3.3% this week, while the KOSPI fell 1.4% over the same period.

Asian markets are under pressure from concerns over oil supply disruptions caused by the Iran conflict, especially as Tehran has blocked the Strait of Hormuz in response to US and Israeli aggression.

The region is highly dependent on Middle Eastern oil supplies, and prolonged disruptions are expected to cause widespread economic chaos.

Japan, South Korea, and India are considered the most vulnerable countries due to their reliance on oil imports. India’s Nifty 50 index declined 2.4% this week.

Chinese stocks stable, outperforming other markets this week

Chinese stocks performed better than other Asian markets this week, as the country is considered relatively resilient to recent oil supply shocks.

The Shanghai and Shenzhen 300 indices and the Shanghai Composite index edged higher on Friday, maintaining a moderate gain for the week.

Hong Kong’s Hang Seng Index fell 0.2%, down 0.3% for the week, with some local tech stocks showing weakness.

OCBC Bank analysts noted in a recent report that China’s large oil reserves, combined with the country’s transition to renewable energy and electric vehicles, largely shield it from the recent oil supply disruptions.

About 15% of China’s oil imports come from Iran. Earlier this week, China announced an immediate ban on all refined oil exports to alleviate domestic shortages.

Other Asian markets saw small gains on Friday. The Australian ASX 200 index rose slightly but declined over 2% this week, as markets increasingly expect the Reserve Bank of Australia to raise interest rates by 25 basis points next week.

Singapore’s Straits Times Index increased 0.2%, up 0.3% for the week.

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