Deutsche Bank’s Jim Reid highlights that Asian equities are mostly lower as investors digest a sharp escalation in US-Iran tensions and surging Oil prices. KOSPI is down over 5% and the Nikkei and S&P/ASX 200 are weaker, while mainland Chinese indices and the Hang Seng are firmer on tech gains. S&P, Nasdaq and Stoxx futures are described as broadly flat.

Tech-led divergence across Asia

"Asian equity markets are largely lower this morning as investors digest a significant escalation in US-Iran tensions overnight."

"Against this backdrop, risk sentiment across Asia is weak but not as much as you may have imagined given the attacks. S&P, Nasdaq and Stoxx futures are all pretty much flat with the rest of Asia down or up depending on which side of the tech stack they sit on."

"The KOSPI losses have accelerated as I'm typing, currently down -5.57% in what seem very fast markets with the Nikkei -0.96%, and the S&P/ASX 200 down -0.49%. In contrast, mainland Chinese equities are firmer ahead of tomorrow’s June inflation report, with the CSI 300 (+0.61%) and Shanghai Composite (+0.52%) moderately higher, whilst the Hang Seng (+2.38%) is outperforming as technology stocks there recover."

"As all that was happening, there wasn’t much respite for equities either, as chipmakers saw a renewed slump that took the Philly semiconductor index (-4.65%) to its lowest in nearly a month. Indeed, the index is now -15.95% beneath its highs in mid-June, after just posting its best quarter ever in Q2. To be fair it wasn’t all bad news, and US equities saw a rotation into defensive sectors."

"Energy (+3.02%), healthcare (+1.55%), consumer staples (+0.99%) and utilities (+0.91%) all had a strong performance. Moreover, a majority of the S&P 500’s constituents were still higher, with 283 companies rising on the day. But the chip declines still dragged on the overall performance, with the S&P 500 ultimately down -0.45%"

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)