Asian Stocks Mostly Fall as Investors Stay Cautious Over Middle East Conflict -- Update

By Ronnie Harui and Sherry Qin

Asian stock markets mostly fell by midday Tuesday, as President Trump expressing his willingness to end the war with Iran failed to revive market sentiment.

South Korea's Kospi slumped 3.4% and Taiwan's stock market shed 2.3%. Japan's Nikkei Stock Average fell 1.2% and Hong Kong's Hang Seng Index dropped 0.5%.

President Trump told aides that he's willing to end the U.S. military campaign against Iran even if the Strait of Hormuz stays mostly closed, The Wall Street Journal reported, citing administration officials.

In recent days, Trump and his aides assessed that a mission to open the waterway would prolong the conflict beyond his timeline of four to six weeks.

Even as Trump signaled he's considering a possible end to the war, the U.S. carried out a massive strike on a large ammunition depot in the Iranian city of Isfahan on Monday night, The Wall Street Journal reported, citing a U.S. official.

Trump posted a video of a chain of explosions lighting up the night sky on Truth Social without a caption.

For Asian equities, HSBC analysts think the conflict has shifted the tone, as higher energy prices lift input costs, weigh on margins and could alter the course of monetary easing across the region.

Crude oil futures were volatile amid the mixed geopolitical developments. Front-month West Texas Intermediate oil futures were 0.1% higher at $102.95 a barrel and front-month Brent oil futures gained 0.2% to $112.98 a barrel, ICE data showed.

Precious metals regained momentum with spot gold up 1.0% at $4,557.63 a troy ounce and spot silver 3.0% higher at $72.03 a troy ounce.

Despite the recent correction, Goldman Sachs said gold may reach $5,400 by the end of the year as the bank still prices in two rate cuts by the Federal Reserve in 2026.

Risk-sensitive Asian currencies were mostly lower against the dollar on Tuesday, with the Korean won hit its weakest level in 17 years. The dollar rose 1.1% against the Korean won to 1533.65, the highest since March 2009. The greenback was 0.4% higher to 32.92 Thai Baht and also up 0.4% to 32.16 New Taiwan dollars.

Prospects of U.S.-Iran negotiations on a cease-fire also remain unclear.

Iran's ministry of foreign affairs denied Trump's assertions that Washington and Tehran were engaged in talks.

"We have had no negotiations with America in these thirty-one days," ministry spokesman Esmaeil Baqaei said in a post on X. However, Trump named Mohammad-Bagher Ghalibaf, the speaker of Iran's parliament, as one of the Iranian officials speaking to the U.S. about ending the war, in a Monday interview with the New York Post.

"At this point, it is impossible to know whether the negotiations between the U.S. and Iran are actually occurring in some way or are merely figments of Trump's imagination," IG's Chris Beauchamp said in an email.

"The market impact of his interventions gets weaker. Until investors are treated to the sight of senior U.S. officials physically getting on a plane to Pakistan to negotiate, investors will become more sceptical," the chief market analyst added.

Write to Ronnie Harui at [e-mail] and Sherry Qin at [e-mail]

(END) Dow Jones Newswires

03-31-26 0103ET