Asia-Pacific markets opened Thursday with strong momentum, as equities in Japan and South Korea climbed to fresh record highs, following overnight gains on Wall Street. The rally was fueled by improved sentiment after Donald Trump extended a temporary ceasefire with Iran, alongside solid U.S. corporate earnings that supported risk appetite.
The positive tone quickly faded as markets reversed course. Investor confidence weakened after reports emerged that the United States had intercepted multiple Iranian oil tankers in Asian waters, raising concerns that tensions in the Middle East could persist and potentially escalate.
Tanker Interceptions Deepen Uncertainty
Shipping and security sources revealed that U.S. forces intercepted at least three Iranian-flagged tankers and redirected them away from key areas near India, Malaysia, and Sri Lanka. This development followed Iran’s navy announcing it had seized two container ships in the Strait of Hormuz, a vital route for global oil shipments.
The sequence of actions has heightened fears of supply chain disruptions and prolonged geopolitical instability, both of which continue to weigh on investor sentiment.
Ceasefire Extension Faces Doubts
Earlier in the week, President Trump announced a two-week extension of the ceasefire, citing internal divisions within Tehran’s leadership. In a statement, he noted that the decision was also influenced by requests from Asim Munir and Shehbaz Sharif, who encouraged additional time for diplomatic coordination.
The ceasefire is set to remain in place until Iran presents a unified proposal or negotiations conclude, while the U.S. continues its blockade of Iranian ports. However, the outlook remains uncertain after Iranian state media reported that its negotiators would not participate in talks, calling them ineffective. The situation has also affected JD Vance, who reportedly delayed travel plans linked to peace discussions.
Regional Markets Turn Lower with Notable Percentage Moves
After hitting intraday records, major Asia-Pacific indices moved into negative territory. The Nikkei 225 briefly reached an all-time high of 60,013.98 before slipping 1.20% on profit taking. The KOSPI also retreated after touching a record 6,538.72, later edging down around 0.74%, while the Kosdaq managed a 0.58% gain.
In Australia, the S&P/ASX 200 traded choppy and fell 0.88%. Hong Kong’s Hang Seng Index declined 1.12% ahead of inflation data, while mainland China’s CSI 300 dropped 0.79%. India’s Nifty 50 also moved lower, losing 0.62% as broader sentiment weakened across the region.
Oil Prices Extend Gains
Oil markets continued to climb as geopolitical risks intensified. West Texas Intermediate rose 1.60% to $92.96 per barrel, while Brent crude advanced 1.28% to $101.91 per barrel, reflecting concerns about potential disruptions to global supply routes.
Strong Economic Data Offers Limited Support
Economic data from Japan showed manufacturing activity expanding at its fastest pace in four years, according to the S&P Global flash Purchasing Managers’ Index, as firms boosted output amid supply concerns linked to Middle East tensions.
Meanwhile, SoftBank Group rose as much as 3.01% earlier in the session before paring gains, following a report that the company is seeking a $10 billion margin loan backed by its holdings in OpenAI to accelerate artificial intelligence investments.
In South Korea, the economy expanded 1.7% in the first quarter from the previous three months, exceeding expectations of 1.0% and rebounding from a 0.2% contraction in the prior quarter, marking the fastest growth since the third quarter of 2020.
Shares of Samsung Electronics hit a new intraday record of 227,000 in early trading before easing. Investors are also monitoring labor developments, as more than 30,000 union workers are expected to rally ahead of a planned strike next month.
Fragile Outlook as Uncertainty Persists
Despite strong earnings in the United States that pushed the Nasdaq Composite to a fresh intraday record, sentiment across Asia-Pacific markets remains fragile.
Iran’s continued rejection of talks and escalating maritime tensions suggest that uncertainty will persist. While economic data and corporate performance remain supportive, markets are likely to stay sensitive to geopolitical developments and the risk of a prolonged conflict in the Middle East.
