Asia Markets Fall After Israeli Missile Strike on Iran — Update

By Kosaku Narioka

Stock markets in Asia fell while safe-haven assets such as U.S. Treasurys, the yen and the Swiss franc rose sharply after Israel launched a retaliatory strike against Iran early Friday.

The Nikkei Stock Average was recently 2.6% lower while Hong Kong's benchmark index was down 1.3%. The dollar fell to as low as 153.59 yen from the day's high of Y154.67, while the euro dropped to as low as 0.9566 franc from CHF0.9722. The 10-year U.S. Treasury yield was down about 10 basis points at 4.531%.

Front-month Brent crude oil futures were up 4.1% at $90.66 per barrel, reversing earlier losses, while gold added 1.5% to $2,413.11 a troy ounce.

The market gyrations came after an ABC News report on Friday cited an unnamed U.S. official as saying that Israel had launched missiles at Iran, a retaliation for Tehran's massive drone and missile attack against Israel last weekend. The Wall Street Journal and other media later reported confirmations of the strike.

Iranian media and social media reported explosions near Isfahan, where Iran has nuclear facilities and a drone factory, while state media reported the country had activated air-defense systems and canceled flights.

Other Asian bourses were broadly lower in early trading, with many extending losses in the wake of the reports. Singapore's benchmark index reversed early gains and was recently down 1.0%, while South Korea's Kospi extended losses to 2.2%.

Jun Rong Yeap, market strategist at IG, said the escalation suggested that "the tit-for-tat retaliation between both sides will drag for longer," with a widening of the conflict potentially putting oil supply or trade routes at risk. Nations in Asia, a net-energy-importing region, are especially vulnerable to any spike in oil prices, he added.

Marcus Garvey, head of commodities strategy at Macquarie Group, said Brent crude was re-testing the $90 level on rising geopolitical risk, but said that it could be short-lived. "Geopolitical risk premium alone generally fails to sustain commodity price moves," he said, pointing to long-term price fluctuations in the wake of events such as the Russian-Ukraine conflict.

Akira Moroga, chief market strategist at Aozora Bank, said the yen could strengthen sharply if bearish bets against the currency are unwound, given that such positions have been building up in the market. "At the very moment, it's difficult to say how much further the situation in the Middle East could escalate," he said.

--Ronnie Harui, Jiahui Huang and Kimberley Kao contributed to this article.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

April 19, 2024 00:40 ET (04:40 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.