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- Asian equity markets take a pause after a relief rally, as oil prices rebound.
- Iran confirms no engagement in ceasefire talks and wants its conditions to be fulfilled before doing so.
- US President Trump warns of escalation in military activities against Iran if it refuses to accept a ceasefire.
Asian stock markets face profit-booking on Thursday after rallying in the last two-three trading days. Equity markets across the largest continent have corrected as the oil price has rebounded, with Iran’s refusal to United States (US) President Donald Trump’s ceasefire plan reviving uncertainty in the Middle East.
As of writing, Nikkei 225 is down 0.72% to near 53,365, Shanghai trades almost 1% lower to near 3,900, Hang Seng dives 2% to near 24,840. Meanwhile, Indian stock markets are closed on Thursday amid Ram Navami celebrations.
WTI oil price extends Wednesday’s gains over 1% to near $91.50 during the day. Higher oil prices carry a negative relation with equities, given that rising energy prices act as key drag on corporate earnings.
Iran's Foreign Minister Abbas Araghchi has stated that the government has not engaged in ceasefire talks with the US and have no plans of any negotiations, according to an Iranian state TV, which also reported a statement from a senior official that Tehran would end the war “when it decides to do so and when its own conditions are met”, and until then it would continue attacks across the region.
According to a report from the Wall Street Journal (WSJ), Tehran key conditions include guarantees that the war would not restart and an end to Israeli strikes on Hezbollah, no interference in Iran’s missile program, and recognition of Iran’s authority at the Strait of Hormuz.
Meanwhile, White House press secretary Karoline Leavitt has stated that US President Trump has warned that Washington’s military will escalate attacks on Iran if it doesn’t agree to a ceasefire.
Asian stocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.













