Asian Markets Slip After Brief Record Highs as Oil Prices Surge on Iran Tensions

Asian markets slipped on Thursday after briefly hitting record highs, as rising oil prices and uncertainty over US-Iran peace talks dampened investor sentiment. Japan's benchmark index surged past a historic milestone before reversing course. The Nikkei 225 briefly crossed the 60,000 mark for the first time, touching 60,013.98, but later fell 1.5% to 58,707.60. South Korea's Kospi also gave up early gains, slipping 0.1% to 6,414.57 after briefly moving above 6,500. Elsewhere in the region, Hong Kong's Hang Seng dropped 1.1% to 25,865.88, while China's Shanghai Composite fell 0.8% to 4,073.71. Australia's S&P/ASX 200 declined 0.8%, Taiwan's Taiex sank 1.6%, and the BSE Sensex was down 0.6%.

Oil surge, Iran tensions hit sentiment

Investor mood weakened as geopolitical tensions in the Middle East continued to escalate. Oil prices rose sharply amid concerns over supply disruptions linked to the ongoing Iran conflict. Brent crude climbed about 1.5% to $103.39 per barrel, while US crude rose 1.8% to $94.66. Prices have surged significantly from around $70 before the war began in late February. As per Reuters, the spike in oil prices follows renewed shipping disruptions in the Gulf, including Iran's seizure of vessels in the Strait of Hormuz, a key global energy corridor. The waterway, which typically handles about 20% of global oil flows, remains largely blocked. ING strategists Warren Patterson and Ewa Manthey said the oil market "is having to reprice expectations," adding that "as hopes fade, the reality of the supply disruption will set in," reported news agency AP.

Early gains fade despite Wall Street rally

Asian markets initially tracked strong gains on Wall Street, where major US indices hit record highs on the back of robust corporate earnings. The S&P 500 rose 1% to 7,137.90, while the Nasdaq jumped 1.6% and the Dow Jones gained 0.7%. Shares of GE Vernova surged 13.7% after strong earnings, while Boeing rose 5.5%. However, the rally in Asia proved short-lived, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 0.5% after earlier hitting a record.

'No-war, no-peace' uncertainty persists

Analysts highlighted that markets remain highly sensitive to geopolitical risks despite recent resilience. "Markets look very on edge here. We are still in a no-war, no-peace zone," said Charu Chanana of Saxo, as per Reuters. She added that even minor escalation fears can push oil higher and drag risk assets lower. Laura Cooper of Nuveen echoed similar concerns, saying "the list of risks is growing as resolutions remain elusive". With peace talks between the US and Iran still uncertain and ceasefire prospects unclear, investors are likely to remain cautious, keeping volatility elevated across global markets.