Global Markets Slip as Iran-US Tensions Drive Oil Prices Higher

Kathmandu. Global stock markets faced a downturn on Thursday due to escalating tensions in the Strait of Hormuz and the lack of a peace agreement between Iran and the United States. Asian stock markets retreated from historic highs, while crude oil prices continued to climb.

Investors are gripped by fear of supply disruptions after Iran seized two cargo ships departing the Gulf region. The MSCI Asia-Pacific Index initially reached a record high of 831.56 points on Thursday but ultimately fell by 0.5 percent as investors began selling off shares.

Japan's Nikkei index also hit a new record for the second consecutive day before closing with a 0.9 percent decline. Markets in Taiwan and South Korea also showed initial optimism but ended the session in the red. Chinese and Hong Kong stock markets fell by 0.8 percent and 1.1 percent, respectively.

The primary driver for the market decline is the rising price of crude oil. On Thursday, Brent crude prices rose by 1.4 percent to $103.3 per barrel. On Wednesday alone, prices had surged by 3.5 percent, crossing the $100 mark.

Iran's tightening grip on the Strait of Hormuz and the seizure of vessels have cast doubt on the durability of the ceasefire in the Middle East. According to Charu Chanana, a lead investment strategist at Saxo, the market is currently in a highly sensitive state, where uncertainty regarding war or peace makes it vulnerable to rumors that drive up oil prices and pull down stock markets.

US markets have shown mixed signals. On Wednesday night, both the S&P 500 and Nasdaq indices reached new record highs. Despite rising energy costs, strong corporate earnings reports provided a boost to Wall Street.

Notably, GE Vernova shares rose by 13.75 percent, while Boeing saw a 5 percent improvement. However, investors remained skeptical after electric vehicle manufacturer Tesla announced plans for significant future spending on AI and robotics, causing its shares to drop by 2 percent.

In currency markets, the US dollar has strengthened, while risk-sensitive currencies like the Australian dollar have weakened. Treasury yields have also seen an increase.