Asian stock markets moved lower on Thursday, giving back earlier April advances following comments from U.S. President Donald Trump that signalled an escalation in the Iran conflict over the coming two to three weeks. The remarks triggered a swift deterioration in risk sentiment across the region.
South Korea's benchmark led the sell-off after having rallied strongly in the prior session. Japan's primary indexes also recorded notable declines, with both markets retracing a portion of their recent rebound and shifting back toward March lows.
Market moves and immediate reaction
The KOSPI was the weakest index in Asia on Thursday, falling 3.7%. Japan's Nikkei 225 dropped 2.0%, while the broader TOPIX fell 1.2%. Those moves largely reversed gains recorded in the previous session, when both South Korean and Japanese markets had been among the leaders in a regional recovery following heavy losses in March.
Initial market momentum had been supported by a positive overnight performance on Wall Street. That sentiment shifted after Mr. Trump's statements, with S&P 500 futures sliding by more than 1% as investors reassessed risk.
Wider regional performance
Other major Asian markets also moved lower. China's CSI 300 declined 0.7% and the Shanghai Composite slipped 0.5%. Hong Kong's Hang Seng was down about 1.0%, pressured in part by renewed weakness among technology stocks. Australia's ASX 200 eased 1.1%, even as the country reported a stronger-than-expected trade balance for February driven by a substantial increase in exports. Singapore's Straits Times fell 0.7%, and futures for India's Nifty 50 slid 1.6%.
Oil prices reacted sharply to the risk repricing, jumping as much as 5% after the U.S. president said American military action against Iran would be stepped up over the next two to three weeks. The Strait of Hormuz, highlighted in Mr. Trump's remarks, is a critical transit route for oil and gas shipments used by several major Asian economies; market participants took the comments as a signal that disruptions could persist.
Policy and macroeconomic implications
Higher crude prices are expected to feed into inflation in the months ahead, a dynamic that could influence central bank behaviour globally. The prospect of rising energy-driven inflation prompted investors to consider the potential for a more hawkish stance from major central banks if price pressures intensify.
What happened in the president's comments
Mr. Trump said the United States will "hit Iran extremely hard" in the coming weeks and urged Tehran to accept a ceasefire or face U.S. strikes on its electricity infrastructure. He also indicated the U.S. would not press to reopen the Strait of Hormuz and suggested that countries reliant on the passage should either source oil from the United States or take steps to reopen the route themselves.
Outlook
Investors reacted to the combination of renewed geopolitical risk and the immediate market impacts - equity losses, a spike in oil prices and softer U.S. futures - by stepping back from recent risk-on positioning. The near-term trajectory for Asian markets will depend on developments around the Iran conflict and any subsequent effects on energy flows and inflation expectations.