Stocks drop and oil surges back above US$100 as US blockade of Hormuz escalates war
Stock markets across Asia fell, with Japan’s Nikkei losing 0.7 per cent and South Korea’s Kospi dropping 0.9 per cent
All equity benchmarks in Asia bar China slid, amid renewed concerns that higher energy costs would derail growth after crude oil futures soared back above US$100 a barrel. Brent and West Texas Intermediate both jumped more than 7 per cent.
Haven trades returned, with the US Dollar Index rising 0.2 per cent to close to 100. Gold slumped 0.9 per cent to around US$4,760 an ounce on rising unease about monetary tightening by global central banks following crude’s surge.
Trump announced the blockade of the Strait of Hormuz, a critical waterway via which one-fifth of the global oil flows, on social media, adding that Iran would be “blown to hell” if it struck back. Iran’s top negotiator Mohammad Baqer Qalibaf pledged to fight back.
US says no agreement reached with Iran after marathon talks in Islamabad
The escalation came after talks between the two nations collapsed in Islamabad over the weekend.
“The failure to reach a deal is negative for markets because it reverses some of the peace dividend that had started to get priced in,” said Charu Chanana, chief investment strategist at Saxo Markets.