It was a case of Asian shares edging lower and oil putting in a comeback on Thursday, all in the wake of the new US action in Iran. Geopolitics has been reinserted into the heart of the trading desk. You have traders hedging for risk around the Strait of Hormuz, while the US side of things is hinting at a less enthusiastic start for Wall Street later on.
According to US officials, Central Command put down four of Iran’s one-way drones in the vicinity of the Strait. They also made an example of a ground control site in Bandar Abbas that was about to send up a fifth. As for President Trump, he had no patience for Iran, calling them out for ‘negotiating on fumes’ and making it clear he won’t be moved from his schedule ahead of the midterms in November.
Oil jumps as strike risk returns
Headlines were enough to put some life back in crude after a down day. Brent, which had tumbled 4.6 percent to USD 92.25 on the notion of a holding ceasefire in southern Iran, was in the green by early Thursday, up USD 1.70 to the USD 93.95 mark.
US benchmark crude was no exception, adding USD 1.68 to close at USD 90.36. That’s a change from Wednesday when it gave up 5.5 percent to end at USD 88.68, or where it was in mid-April. We’ve seen some cooling since we were over the USD 100 line, with the market banking on a deal to let tankers out of the Persian Gulf and through the Strait once more.
Equity types are taking note. A day ago, you could see the effect of lower fuel costs on the likes of Norwegian Cruise Line (up 6.1 percent), United (6.3) and Delta (3, at an all-time high). If this oil rally holds, that kind of support may well be a thing of the past.
Asia reacts: pockets of resilience, broader caution
The mood in the region was to step back from risk. Hong Kong’s Hang Seng was down 1.9 percent to 24,855.86; in China, the Shanghai Composite lost 0.3 to 4,080.00. South Korea’s Kospi was off 1.2 to 8,126.67 and in Australia the S and P/ASX 200 put in a 0.8 percent drop to 8,646.30.
Then again, not everywhere was in the red. Japan's Nikkei 225 inched up to 65,039.78, and Taiwan’s Taiex was 0.6 percent in the black. There was a certain defensiveness to the tone in the wake of what the US has put down as strikes on Iran, and you can see it in the fresh spike in crude.
“Markets are more than a little wary of any prospect for a deal between the US and Iran, and with all the mixed signals on how that might look, risk sentiment has been put on hold,” says Tan Boon Heng of Mizuho Bank in Singapore. “Sure, there’s an inclination to keep the ceasefire in place with both sides softening their rhetoric and talking behind the scenes. But when it comes to the hard questions, it’s not easy to see where the give-and-take is.”
India and currencies
Indian markets were off for the day, but the Gift Nifty told a different story, edging down by 200-odd points to 23,604 in line with the rest of the region.
On the currency side, the greenback put in a small gain, up to 159.57 yen from 159.51. The euro, for its part, gave up some ground to 1.1611, a sign of the flight to safety following the strikes.
Wall Street momentum meets geopolitics
Futures at 11 am IST were pointing to a softer opening on Wall Street at 7 pm: Nasdaq 0.9 percent in the red, S&P 500 0.41 percent lower, and the Dow 0.21 percent off. A bit of a change of pace after the way they were hailing the drop in oil on Wednesday.
Then again, all three had been at record levels. The S&P 500 was at 7,520.36, the Dow at 50,644.28 and the Nasdaq at 26,674.73. Cheaper energy had for a while taken the edge off for consumers and companies alike.
But it’s been earnings that have been the engine of the rally. Firms have put up numbers for the first part of 2026 that are better than you’d expect, and that’s going to go on, which is some ballast against the jitters from the oil market.
Key moves to track
What’s on the docket:
– Four drones put down by the US near the Strait
– A hit on a control station in Bandar Abbas
– Brent: 93.95 (up 1.70)
– WTI: 90.36 (up 1.68)
– Hang Seng: 24,855.86 (-1.9%)
– Nikkei: 65,039.78, flat
– Gift Nifty: 23,604 (-0.86%)
– USD/JPY: 159.57; EUR/USD: 1.1611
You know what’s coming. A move to open up the Strait of Hormuz or another round of hostilities will be the next driver for oil and the like. For now, with no clear picture, traders are treading lightly and adjusting to the news as it comes in.
