- Asian stock markets open mixed following Trump’s threat to target Iran’s civilian infrastructure.
- Concerns about Iran’s reciprocal attacks on targets in the Gulf states keep investors on edge.
- War-driven inflation fears fuel Fed rate hike bets and also undermine the global risk sentiment.
Asian equity markets opened mixed at the start of a new week as traders remain on edge amid the risk of a further escalation of tensions in the Middle East. US President Donald Trump threatened to destroy Iran’s civilian infrastructure, including power plants and bridges, if the vital waterway is not open by Tuesday, if Tehran does not meet his deadline to reopen the Strait of Hormuz by Tuesday.
Iran, on the other hand, outlined a new condition and said that the transit through the strategic waterway could resume if part of the revenue is allocated to compensate Iran for war-related damages. Adding to this, Ali Akbar Velayati, an advisor to Iran’s new Supreme Leader Mojtaba Khamenei, warned that the resistance front could target the Bab el-Mandeb Strait in the Red Sea—another critical chokepoint. This fuel worries about a further disruption to key global trade routes and continues to weigh on investors’ sentiment.
Meanwhile, persistent geopolitical uncertainties remain supportive of elevated Crude Oil prices, which, in turn, continue to fuel inflationary concerns. Apart from this, the upbeat US Nonfarm Payrolls (NFP) report released on Friday removes any near-term pressure on the Federal Reserve (Fed) to cut interest rates. Market players, instead, are now pricing in a greater chance that the US central bank will raise borrowing costs by the end of this year. This turns out to be another factor that undermines the global risk sentiment.
At the time of writing, Japan’s Nikkei 225 and South Korea’s Kospi are trading around 1% higher for the day. Meanwhile, Indonesia’s IDX Composite and Malaysia’s KLCI index are experiencing some downward pressure amid relatively thin liquidity on the back of the Easter Monday Holiday in many global financial markets.
