Asian stocks slide on flare-up in Middle East fighting, oil eases off highs
“Financial markets shifted back into a risk-off mode as the US and Iran exchanged fire again,” analysts from Westpac wrote in a research report.
A trader works on the floor of the New York Stock Exchange on May 29, 2026. (File photo: AP/Richard Drew)
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SINGAPORE: Asian stocks fell on Thursday (Jun 4) as renewed fighting between the US and Iran rattled investors, although oil slipped from recent highs after Israel and Lebanon agreed to a ceasefire.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.5 per cent, while S&P 500 e-mini futures slipped 0.5 per cent. Korean shares reopened as much as 2.6 per cent lower after a holiday, while Japan’s Nikkei 225 slumped 1.9 per cent.
“Financial markets shifted back into a risk-off mode as the US and Iran exchanged fire again,” analysts from Westpac wrote in a research report.
Stocks on Wall Street dropped overnight, with the S&P 500 falling 0.7 per cent and oil prices rising around 2 per cent as talks between Tehran and Washington showed little progress and hostilities erupted anew.
Traders looked through better-than-expected US ISM services sector PMI data, which rose in May as businesses preemptively placed orders and rebuilt inventories in anticipation of shortages and higher prices because of the Iran war.
Brent crude futures were 1.3 per cent lower at US$96.59 a barrel as trading resumed on Thursday after Lebanon and Israel agreed to implement a ceasefire, which is contingent on a complete cessation of fire from the Iran-aligned Hezbollah militia and the evacuation of all its operatives from the South Litani Sector.
The two sides had agreed last month to a ceasefire but hostilities had continued.
The Republican-led US House of Representatives approved a war powers resolution on Wednesday to block President Donald Trump from continuing the conflict against Iran. The measure is largely symbolic as it must still pass the Senate and would need a two-thirds majority in both chambers to override an almost certain presidential veto.
Broadcom shares plunged more than 13 per cent in extended trading after missing Wall Street expectations for second-quarter revenue on Wednesday, while its top executive left a previous 2027 sales forecast unchanged in a rare sign that the AI chipmaker may be losing steam.
In currency markets, the yen strengthened 0.1 per cent to 159.88 per dollar, opening a little distance for the 160 level seen by traders as a trigger for intervention.
Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank must discuss the pros and cons of raising interest rates if inflationary risks outweigh downside risks to the economy, in remarks that signalled a strong chance of a rate hike this month.
The Aussie dollar nudged 0.1 per cent higher after data showed Australia’s trade balance swung back into surplus in April after a surprise deficit the previous month, as a rebound in resource exports helped offset a surge in fuel imports.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, held steady at 99.44 after a three-day rally which took the currency to its strongest level since Apr 7.
The yield on the US 10-year Treasury bond was down 1.4 basis points at 4.473 per cent.
Gold rose 0.9 per cent at US$4,473.61per ounce, staying firmly within the trading channel it has sat in since the middle of last month.
Bitcoin tumbled 4 per cent to a four-month low of US$62,321.87, while ether was down 1.9 per cent at US$1,744.70.
Bitcoin has dropped as much as 17 per cent in five straight days of declines, “undercut by a toxic combination of a stronger US dollar and rising yields, alongside a shift toward more cautious risk sentiment”, IG analyst Tony Sycamore wrote in a client note.
Source: Reuters/rk
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