Military tensions between the US and Iran caused sharp fluctuations in Asia's largest markets. Investors moved away from risky assets due to rising oil prices and inflationary pressures.
In Japan, the Nikkei 225 index lost nearly 3% during the day amid sell-offs in chip stocks. The index fell below 63,000 points for the first time since May 22.
By the close, the Nikkei limited its losses, ending down 0.44% at 63,896.82 points. The broader Topix index declined 0.85% to 3,814.97 points.
Inflation concerns in the bond market
The tensions and rising commodity prices also impacted Japan's bond market. The yield on Japan's 10-year government bond rose by 1 basis point to 2.690%.
The 30-year bond yield increased by 2 basis points to 3.870%. Investors priced in the possibility that rising energy costs could increase pressure on import-dependent economies like Japan.
Mixed performance in Asian stock markets
South Korea's Kospi index dropped more than 4% intraday but closed down 0.62% at 7,682.53 points. The tech-heavy Kosdaq index remained flat.
Hong Kong's Hang Seng index diverged from the region, rising 0.2% to 24,468.82 points. The Shanghai Composite Index fell 0.2% to 3,983.80 points.
Taiwan's Taiex index also declined by 0.4%. The regional volatility reflected varying degrees of global risk aversion across Asia.
Oil prices on the rise
On the US side, new attacks targeted multiple sites in Iran, raising fears that the fragile ceasefire could completely collapse. The US described the strikes as self-defense, while Iran reported explosions near the Strait of Hormuz.
Explosions were reported near Qeshm, Kargan, and Sirik. Iran's announcement that it closed the critical energy transit point of the Strait of Hormuz heightened concerns about global oil supply.
Brent crude oil prices rose 1.57% to $94.56 per barrel. US West Texas Intermediate (WTI) crude also increased 1.89% to $91.73, with futures gaining more than $3 during the day.
Chip stocks under pressure on Wall Street
US markets were also affected by the overnight selling pressure. The Dow Jones Industrial Average fell 953.33 points to 49,918.78.
The S&P 500 closed down 119.66 points at 7,266.99, while the Nasdaq Composite lost 509.32 points. Selling in semiconductor stocks continued to weigh on tech-heavy indexes.
