Source: Sharecast
Renewed geopolitical tensions followed remarks from Iran’s new supreme leader, Mojtaba Khamenei, who said in a late Thursday speech that the Strait of Hormuz - a critical route for global oil trade - should remain closed and warned that Tehran could open additional fronts if the conflict persists.
Alireza Tangsiri, commander of the Iranian Revolutionary Guard Corps Navy, reinforced the threat in a social media post, warning of “the harshest blows to the aggressor enemy.”
As Patrick Munnelly, market strategy partner at TickMill, noted, “Asian markets took a hit as investors treaded carefully ahead of the weekend, wary of escalating tensions involving Iran.”
Oil prices remained volatile amid the escalating tensions.
Brent crude futures were last up 0.35% on ICE at $100.81 per barrel, while the NYMEX quote for West Texas Intermediate slipped 0.28% to $95.46.
Analysts at Goldman Sachs said Brent could average $98 per barrel in March and April - roughly 40% higher than the 2025 average - before falling to $71 by the fourth quarter.
In a scenario where oil flows through the Strait of Hormuz are disrupted for a month, Brent could average around $110 in March before easing to $76 by the end of the year.
Munnelly said “Brent crude held steady, trading just above $100 per barrel after a sharp 9.2% surge the previous day,” adding that “market volatility persisted as traders weighed the US administration's moves to curb soaring energy prices against heightened rhetoric from both Donald Trump and Iran's newly appointed supreme leader.”
Despite the spike in energy prices, US president Donald Trump sought to downplay the impact, saying the United States - the world’s largest oil producer - stood to benefit from higher prices, while emphasising that Washington’s priority remained preventing Iran from acquiring nuclear weapons.
Treasury secretary Scott Bessent also said the US would temporarily allow the purchase of sanctioned Russian crude already at sea to help stabilise energy markets, describing the current price spike as a “temporary disruption”.
According to Munnelly, “Asian stocks managed to claw back some of their losses, and S&P 500 futures rallied up to 0.5% after the US announced a second temporary waiver allowing purchases of Russian oil”.
Equities in the red across the region
In Japan, the Nikkei 225 fell 1.16% to 53,819.61, while the broader Topix declined 0.57% to 3,629.03.
BayCurrent dropped 6.67%, Honda Motor slid 5.56%, and Renesas Electronics lost 5.24%.
Chinese markets also moved lower - the Shanghai Composite declined 0.82% to 4,095.45, while the Shenzhen Component slipped 0.65% to 14,280.78.
Among the biggest fallers, Gansu Yasheng Industrial Group plunged 10.06%, Beijing Teamsun Technology dropped 10.01%, and Shanghai Yongguan Adhesive Products also lost 10.01%.
In Hong Kong, the Hang Seng Index fell 0.98% to 25,465.60.
Orient Overseas International led losses with a drop of 7.46%, followed by MTR Corporation, which declined 6.42%, and Xinyi Glass Holdings, down 5.09%.
South Korea’s Kospi 100 recorded one of the region’s sharpest declines, falling 1.81% to 6,249.37.
Posco Future M plunged 9.31%, S-Oil Corporation dropped 8.47%, and Hanwha Solutions slid 8.11%.
Australian shares proved relatively resilient, with the S&P/ASX 200 edging 0.14% lower to 8,617.10.
Northern Star Resources slumped 18.75%, IperionX dropped 14.05%, and Contact Energy declined 6.53%.
In New Zealand, the S&P/NZX 50 eased 0.09% to 13,187.34.
Freightways fell 2.91%, Tourism Holdings declined 2.52%, and Eroad lost 2.23%.
Economic data from New Zealand offered a brighter note.
The BNZ-BusinessNZ performance of manufacturing index showed the sector continuing to expand in February, with the seasonally adjusted PMI at 55.0, only slightly below January’s 55.1 and well above the long-run average of 52.5.
BusinessNZ director of advocacy Catherine Beard said the reading marked the first time since mid-2021 that the PMI had recorded three consecutive months at 55 or higher, signalling a sustained improvement in manufacturing conditions.
New orders stood at 57.6 and production at 56.7, while deliveries registered 51.0 and employment remained in expansion territory at 50.4.
BNZ senior economist Doug Steel noted that the survey period largely predates the latest escalation in Middle East tensions but said the data showed the sector entering the current period of global uncertainty from a relatively solid position.
Demand for dollar sees US currency strengthen
Currency markets reflected continued demand for the dollar, with the greenback last up 0.09% on the yen to trade at JPY 159.49, as it climbed 0.54% against the Aussie to AUD 1.4206, and gained 0.57% on the Kiwi to change hands at NZD 1.7179.
Meanwhile, recession concerns also crept higher, with bettors on the Kalshi prediction market raising the probability that the US economy could enter a recession this year to 32%, the highest level so far in 2026.
In bond markets, Munnelly noted that “US Treasuries held steady following a broad selloff the day before, spurred by growing inflationary pressures,” noting that “the yield on the policy-sensitive two-year note jumped nine basis points to 3.74%, while the 10-year yield edged up three basis points to 4.26%.”
Reporting by Josh White for Sharecast.com.