Asia markets retreat on renewed Middle East fears

May 08, 2026 (MLN): Asian markets moved lower on Friday as investors reacted to renewed military tensions between the United States and Iran, despite ongoing claims from both sides that a ceasefire arrangement remains intact.

Market sentiment weakened after reports emerged of fresh exchanges in the Strait of Hormuz, with Washington and Tehran each accusing the other of initiating the confrontation.

The flare-up reignited concerns over geopolitical stability in the Middle East and potential disruptions to global energy supplies.

U.S. President Donald Trump attempted to downplay the escalation, describing the latest military action as “just a love tap” during remarks to News late Thursday.

However, he later adopted a more aggressive tone in a post on Truth Social, claiming U.S. forces had “completely destroyed” Iranian boats and drones involved in the incident, as reported by CNBC.

Trump also warned that Washington could intensify military action if Tehran fails to finalize a nuclear agreement, stating that future responses would be “a lot harder” and “more violent” should negotiations stall.

Oil prices initially surged on fears of supply disruptions through the Strait of Hormuz a critical global shipping route before trimming gains later in the session. U.S.

West Texas Intermediate (WTI) crude futures climbed 0.81% to $95.85 per barrel, while Brent crude futures advanced 1.07% to $101.13 per barrel.

Regional equity markets broadly traded in negative territory as investors shifted toward safer assets.

Japan’s Nikkei 225 declined 0.68%, with traders booking profits following the benchmark’s record close a day earlier. In South Korea, the KOSPI dropped 0.93%, although the small-cap Kosdaq index edged up 0.35%.

Australia’s S&P/ASX 200 fell sharply by 1.74%, while mainland China’s CSI 300 lost 0.90%. Hong Kong’s Hang Seng Index shed 1.19%, and India’s NIFTY 50 slipped 0.50%.

U.S. stock futures were little changed during Asian trading hours. Futures tied to the S&P 500 and Nasdaq-100 traded marginally lower, while futures linked to the Dow Jones Industrial Average fell by 12 points.

On Wall Street, major indexes ended Thursday’s session in the red as weakness in technology and semiconductor shares weighed on sentiment.

The S&P 500 declined 0.38% to close at 7,337.11, pressured by losses in Amazon and chipmakers including Broadcom and Micron Technology.

The Nasdaq Composite slipped 0.13% to finish at 25,806.20 after briefly touching a fresh intraday record high. Meanwhile, the Dow Jones Industrial Average dropped 313.62 points, or 0.63%, to settle at 49,596.97.

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