Asian equity markets turned lower on Tuesday as investors reacted to a rise in tensions around the Strait of Hormuz and braced for a likely interest rate increase from Australia’s central bank. Several major regional markets were not trading, which left volumes subdued and amplified the sensitivity of remaining markets to global risk cues.
Markets in Japan, China, and South Korea were closed, contributing to thin regional turnover. Asian bourses took a negative lead from Wall Street, which declined on Monday after Iran launched strikes in response to a U.S. operation to reopen the Strait of Hormuz. The development threatened to upset an already fragile ceasefire between the United States and Iran, even though separate comments from Iranian officials indicated that talks between the parties were still advancing. In Asian trading, S&P 500 futures were flat.
Australia: equities weaken ahead of RBA move
Australia’s ASX 200 slid 0.6% as investors positioned themselves ahead of a widely expected 25 basis point rate increase by the Reserve Bank of Australia. That anticipated move would mark the RBA’s third 25 basis point rise so far this year as the central bank contends with a re-emergence of inflationary pressures.
Heightened concerns that the Iran-related escalation could push global oil and gas prices higher added to the RBA’s hawkish tone. The central bank has previously cited Iran-related disruptions as a significant factor behind its March rate decision. Local equities have reacted poorly to the prospect of higher rates: the ASX 200 had declined in 10 of the 11 sessions leading up to the RBA decision.
Individual stock movements weighed on the market. Westpac Banking was a notable drag, dropping 1.8% after reporting a fiscal first-half profit that fell short of market expectations. In the materials sector, gold miner Regis Resources tumbled 4.9% following its announcement that it will acquire peer Vault Minerals.
Hong Kong and broader regional moves
Hong Kong’s Hang Seng index fell 0.8%, pressured by a reversal among local technology stocks that tracked overnight weakness on Wall Street. The sector also experienced some profit-taking after a recent strong run driven by optimism around artificial intelligence.
Late-April gains in Hong Kong tech had been driven in part by DeepSeek’s release of a new AI model, but that momentum eased as investors booked profits. Elsewhere, Singapore’s Straits Times index retreated 0.3%, while futures for India’s Nifty 50 were flat.
The combination of geopolitical risk, a central bank leaning toward tighter policy, and sector-specific profit-taking left most broader Asian markets on the back foot. With trading reduced by several market holidays, movements were concentrated and reactive to the latest global developments.