Asian markets drop amid Middle East tensions

Markets in Japan, China, and South Korea were closed, keeping trading volumes dull

Asian markets dropped on Tuesday as risk appetite was battered by heightened tensions in the Strait of Hormuz, while Australian markets declined before a widely expected interest rate hike by the Reserve Bank.

Markets in Japan, China, and South Korea were closed, keeping trading volumes dull.

Asian markets dropped 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 tenuous ceasefire between Iran and the U.S., although separate comments from Iranian officials indicated that talks between both sides were still progressing.

S&P 500 Futures were flat in Asian trade.

ASX 200 shed 0.6% before a widely expected interest rate hike by the Reserve Bank.

The RBA is expected to raise rates by 25 basis points– its third such move this year, as the central bank grapples with a resurgence in inflation.

Concerns over the inflationary shock of the Iran war – as global oil and gas prices rose – added to the RBA’s hawkish outlook, with the central bank having cited Iran-related disruptions as a major motivator of its March rate hike.

The ASX 200 has dropped for 10 of the past 11 sessions leading up to the RBA decision, with higher rates boding poorly for equities.

Westpac Banking was a major weight on the ASX, declining 1.8% after its fiscal first-half profit missed market expectations. Gold miner Regis Resources shed 4.9% after it said it will take over peer Vault Minerals.

Hang Seng index slipped 0.8%, pressured by a turnaround in technology stocks.

Tech was also pressured by some profit-taking, after optimism over artificial intelligence drove a strong run-up in the sector in recent weeks.

DeepSeek’s release of a new AI model had driven sharp gains in Hong Kong’s tech sector in late-April, although this gave way to some profit-taking as optimism cooled.

Broader Asian stocks also mostly retreated. Straits Times index slid 0.3%, while futures for Nifty 50 index were flat.