Asian stocks slip as oil prices rise, India's NIFTY falls below 23,000
- Most Asian stock markets edge lower on Monday.
- Ongoing tensions in the Middle East drive oil prices higher and dampen investor appetite for risk.
- India’s NIFTY 50 slumps below the crucial 23,000 support level.
Asian equities mostly trade in negative territory on Monday, pressured by rising oil prices and higher US Treasury yields. Traders doubt that the United States (US) and Iran will reach a ceasefire agreement soon.
US President Donald Trump on Sunday rejected an Iranian proposal to reopen the Strait of Hormuz, claiming Tehran was desperate to make a deal, per Reuters. Trump said that he expects talks with Iran to resume this week, though Iran shows no sign of watering down its proposals.
The Indian stock market faces some selling pressure on Monday, with the NIFTY 50 falling by 1.25% to 22,855 amid escalating US-Iran geopolitical tensions. Meanwhile, the BSE Sensex tumbled over 1.30% to 72,945. Volatility could remain elevated as traders head towards the month-end expiry of Nifty and Bank Nifty contracts on Tuesday.
The Nikkei 225, Japan’s benchmark, declined 0.06% to 66,330. Japan's Prime Minister Takaichi Sanae said on Friday that Trump expressed concern about the Yen's weakness during their latest summit. Finance Minister Katayama Satsuki reconfirmed "the yen's undervaluation is problematic" after speaking by phone with US Treasury Secretary Scott Bessent.
The SHANGHAI, China’s main stock market index, dropped by 1.75% to 3,820. The Hong Kong Stock Exchange increased by 0.65% to 24,665. The Shenzhen Stock Index slumped by 3.35% to 12,870.
In Taiwan, the Taiex slips by 0.28% to 48.025. The South Korean stock, the benchmark KOSPI, tumbles by 2.15% to 6,925 as traders locked in profits from large-cap tech shares.
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.
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