TOKYO — Energy costs soared and stock markets across Asia fell Monday following President Donald Trump’s declaration of an upcoming naval blockade at the Strait of Hormuz, after diplomatic efforts to reach a ceasefire agreement with Iran collapsed in Pakistan.
The planned military action targeting all Iranian ports is scheduled to commence Monday at 10 a.m. Eastern time, according to Pentagon officials. The strategic waterway has seen maritime traffic virtually halted since Iran began disrupting shipping operations when hostilities began in late February.
Energy markets have experienced dramatic volatility since the shipping disruptions began. International Brent crude has skyrocketed from approximately $70 per barrel before the conflict started to peaks exceeding $119.
Monday’s trading session saw dramatic increases in petroleum prices. Domestic crude futures surged $8.38, representing an 8.7% gain to reach $104.95 per barrel. International Brent crude climbed $7.00, or 7.4%, settling at $102.23 per barrel.
Financial markets throughout Asia experienced significant losses. Japan’s Nikkei 225 dropped 1.0% during morning sessions to 56,357.40. Australia’s S&P/ASX 200 declined 0.5% to 8,913.50. South Korea’s Kospi index fell 1.1% to 5,795.15. Hong Kong’s Hang Seng retreated nearly 1.5% to 25,513.42, while Shanghai’s Composite index slipped 0.2% to 3,976.57.
Financial experts anticipate continued market volatility in the coming period.
“The outcome of the talks was not really what people were hoping for, that’s for certain,” said Neil Newman, Managing Director and Head of Strategy at Astris Advisory Japan, speaking from Hong Kong.
“As we stand here at the moment, it doesn’t look very nice. Certainly, the oil prices are a big concern.”
American markets concluded the previous week with consecutive weekly advances. The S&P 500 edged down 0.1% Friday following volatile trading. The Dow Jones Industrial Average declined 0.6% while the Nasdaq composite advanced 0.4%. However, these gains occurred amid weekend optimism regarding the Pakistan negotiations that was subsequently dashed by later developments.
Ten-year Treasury yields increased to 4.32% Friday from the previous day’s close of 4.29%.
Overall, the S&P 500 dropped 7.77 points to close at 6,816.89. The Dow retreated 269.23 points to finish at 47,916.57, while the Nasdaq added 80.48 points to end at 22,902.89.
Currency markets saw the dollar strengthen to 159.74 Japanese yen from 159.25 yen. The euro weakened to $1.1687 from $1.1729.
