Asian Markets Retreat as U.S. Interception of Iranian Tankers Fuels Geopolitical Uncertainty

Asian markets gave up early gains and mostly swung to losses, as investor confidence wavered on media reports that the U.S. has intercepted at least three Iranian oil tankers in Asian waters, heightening uncertainty that the Middle East conflict may drag on.

Earlier in Thursday's session, Japan and South Korea stocks hit record highs, trailing overnight gains on Wall Street after President Donald Trump's extended a ceasefire with Iran, boosting investor sentiment alongside strong corporate earnings.

The U.S. military has intercepted at least three Iranian-flagged tankers in Asian waters and is redirecting them away from positions near India, Malaysia and Sri Lanka, shipping and security sources said on Wednesday.

This followed Iran's navy saying it had seized two container ships in the Strait of Hormuz.

Trump extended a two-week U.S. ceasefire on Tuesday, saying it was warranted due to Tehran's "seriously fractured" government.

"Based on the fact that the Government of Iran is seriously fractured, not unexpectedly so and, upon the request of Field Marshal Asim Munir, and Prime Minister Shehbaz Sharif, of Pakistan, we have been asked to hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal," Trump said in a Truth Social post.

The ceasefire will remain in place until Iran submits a proposal or talks conclude, while the U.S. military continues its blockade of Iranian ports, Trump said.

However, the timeline remains uncertain. Iranian state media reported Wednesday that Tehran's negotiators would not attend talks with the U.S., calling them a "waste of time." A lack of commitment from Iran reportedly prompted Vice President JD Vance to pause his trip to join peace talks.

The West Texas Intermediate futures rose 1.33% to $94.20 per barrel as of 2:31 a.m. ET. Brent crude added 1.21% to $103.50 per barrel.

Japan's Nikkei 225 ended Thursday's session 0.75% lower at 59,140.23, after briefly touching an all-time intraday high of 60,013.98 in early trade.

Japan's manufacturing activity expanded at its fastest pace in four years in April, according to the S&P Global flash Purchasing Managers' Index, as firms boosted output amid supply concerns linked to Middle East tensions.

Index heavyweight Softbank Group Corp closed 3.86% higher at 5,867. A Bloomberg report said the company is taking on more debt in its push for AI, seeking a $10 billion margin loan backed by its OpenAI holdings.

South Korea's Kospi reached an all-time intraday high of 6,538.72 in early trade and ended 0.90% higher at 6,475.81. The small-cap Kosdaq dropped 0.58% to 1,174.31. The country's economy grew more than expected in the first three months of the year, recording the fastest growth since the third quarter of 2020.

The 1.7% growth in January to March from the previous quarter exceeded Reuters' estimates of 1.0% and rebounded from the 0.2% contraction in the prior quarter.

Samsung Electronics ended the session more than 3% higher, after its shares had hit a new intraday record of 227,000 in early trade. Investors were also monitoring labor developments, as the company's unions expected more than 30,000 workers to attend a rally in South Korea on Thursday, ahead of a planned strike next month.

Australia's S&P/ASX 200 traded choppy, falling 0.57% to 8,793.40.

Mainland China's CSI300 index slipped 0.29%, while Hong Kong's Hang Seng index fell 0.91% ahead of the release of the city's March inflation data.

India's Nifty50 fell 0.75%.