Asian Stocks Slide, Oil Holds Above $100 as U.S.-Iran Tensions Flare Again
SINGAPORE, May 5 (Reuters) — Asian stocks fell on Tuesday and oil prices, while easing slightly, remained stubbornly above $100 a barrel after the latest skirmishes between the U.S. and Iran in the Strait of Hormuz shattered any lingering optimism for a near-term ceasefire.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.3%, with Australian shares down 0.4% in thin trading. Markets in Japan and South Korea were closed for holidays. U.S. futures also edged lower, with Nasdaq and S&P 500 futures each dipping about 0.1%, while European futures pointed to a weaker open.
The renewed confrontation came as the two countries traded blows over the strategic waterway, a vital chokepoint for global energy shipments. On Monday, the U.S. launched a new effort to guide stranded tankers through the Strait, but Iran quickly countered with its own maritime blockade. Maersk confirmed that its U.S.-flagged vehicle carrier, the Alliance Fairfax, had exited the Gulf under U.S. military escort.
“We started yesterday with high hopes that operation ‘Project Freedom’ would be a success on the ground, pitched as a humanitarian effort,” said Tony Sycamore, a market analyst at IG. “But as we saw, the Iranians weren’t taking that bait at all. It really signifies that the stalemate remains in place — it’s been a very shaky start.”
Brent crude futures fell 0.5% to $113.85 a barrel, while U.S. crude slid 1.3% to $105.03, after both benchmarks surged on Monday on supply disruption fears.
“This isn’t just a blip — it’s a reminder that the Middle East is a powder keg, and markets are pricing in that risk,” said Linda Park, a senior energy analyst at Vanguard Global Markets. “Every time we think diplomacy is making headway, something like this happens. It’s exhausting for traders.”
Beyond geopolitics, investors were bracing for a busy week of earnings. Advanced Micro Devices and Pfizer were among the names set to report later Tuesday. Data from S&P Global Market Intelligence showed 83% of S&P 500 companies that have reported so far beat earnings estimates, and 78.2% beat on revenue.
“With no signs of slowing down, AI-driven spending will likely continue to do the heavy lifting for S&P 500 earnings growth, led by the technology sector,” said Jeff Buchbinder, chief equity strategist at LPL Financial.
YEN UNDER WATCH
In currency markets, the yen was steady at 157.22 per dollar after a brief spike on Monday to 155.69, which reignited speculation of another round of intervention by Japanese authorities. Finance Minister Satsuki Katayama warned against speculative trading, keeping traders on edge after Tokyo was widely believed to have stepped in last Thursday.
“They could intervene again if dollar/yen continues to test 160, which they have historically defended,” said Abbas Keshvani, Asia Macro Strategist at RBC Capital Markets. “But we suspect intervention will merely act as a lid on USD/JPY, not a catalyst for protracted yen strength.”
The Australian dollar edged 0.06% lower to $0.7163 ahead of the Reserve Bank of Australia’s interest rate decision, where a hike was widely expected. The U.S. dollar firmed on safe-haven demand.
Investors are also watching a raft of U.S. data this week, including April’s nonfarm payrolls report on Friday. Expectations are for the economy to have added 62,000 jobs, following March’s outsized 178,000 gain, though seasonal adjustment issues add uncertainty. Markets currently expect the Fed to hold rates steady this year, given inflationary pressure from the global energy shock.
Spot gold rose 0.2% to $4,529.19 an ounce, trading within recent ranges.
“Every time I think we’ve seen the worst of this cycle, something else pops up — Iran, yen intervention, earnings jitters,” said Mark Delaney, a retail investor from Sydney. “It feels like the market is running on fumes. Honestly, I’m just waiting for the next shoe to drop.”
(Reporting by Rae Wee; Editing by Christopher Cushing)