Asian stock markets fell on Thursday as tensions rose following fresh US military strikes on Iran, which Washington described as defensive actions.
At the same time, oil prices climbed by more than $2 per barrel after dropping sharply in the previous session, while US futures also edged lower.
US officials said Central Command forces shot down four Iranian attack drones near the Strait of Hormuz. They also struck a drone control facility in Bandar Abbas that was preparing to launch another drone. These strikes came after earlier military actions earlier in the week.
US President Donald Trump said Iran is “negotiating on fumes” and insisted that upcoming US elections would not influence his approach to ending the ongoing conflict, now in its third month.
Asian markets under pressure
In early trading, Japan’s Nikkei 225 fell 0.4%, while South Korea’s Kospi also dropped 0.4%.
Hong Kong’s Hang Seng Index declined 1.4%, and China’s Shanghai Composite edged up slightly by 0.1%.
Australia’s S&P/ASX 200 slipped 1.4%, while Taiwan’s main index also recorded losses.
Analysts said uncertainty around US–Iran negotiations and the fragile ceasefire continued to weigh on investor confidence.
“Markets remain cautious as it is still unclear whether a lasting deal can be reached,” said Tan Boon Heng of Mizuho Bank.
He added that while both sides appear to avoid escalating tensions publicly, major disagreements remain unresolved.
Oil prices rebound
Oil prices, which had dropped sharply earlier in the week, rose again on renewed concerns over supply risks in the Middle East.
Brent crude gained more than $2 to around $94 per barrel in early trading, while US crude also moved higher.
Earlier, oil had fallen after hopes that a ceasefire between the US and Iran might hold, easing fears over disruptions in the Strait of Hormuz — a key global oil shipping route.
Wall Street at record highs
On Wednesday, US stock markets had closed slightly higher, with all three major indexes — the S&P 500, Dow Jones Industrial Average, and Nasdaq — reaching record levels.
Shares of airlines and cruise companies rose as falling oil prices earlier in the week boosted expectations of lower fuel costs.
Despite ongoing geopolitical uncertainty and inflation concerns, strong corporate earnings have helped support market gains.
Currency movements
In currency trading, the US dollar held steady against the Japanese yen, while the euro slipped slightly.