HONG KONG: Asian stocks mostly retreated and oil prices jumped on Monday after US President Donald Trump warned Tehran that the “clock is ticking” as US-Iran negotiations over a permanent end to the war stall.
US futures fell more than 0.6 per cent.
Markets in Japan and South Korea pulled further back from their records. Tokyo's Nikkei 225 fell 0.9 per cent to 60,843.09, a decline led by technology-related stocks, after it reached all-time intraday high levels last week above 63,000.
The yield on the 10-year Japanese government bond surged to 2.8 per cent, its highest level since the late 1990s, part of a shift toward higher yields as the Bank of Japan gradually raises interest rates and higher energy costs raise expectations of rising inflation. That's up from around 2.55 per cent just one week ago.
Seoul's Kospi jumped 0.9 per cent to 7,558.50 after trading lower earlier in the day. It crossed the 8,000 mark on Friday, supported by buying of technology shares driven by the boom in artificial intelligence, but later declined partly on profit-taking by investors.
Hong Kong's Hang Seng lost 1.6 per cent to 25,543.32. The Shanghai Composite index edged 0.1 per cent lower to 4,132.24, after China reported weaker-than-expected retail data for April.
Australia's S&P/ASX 200 declined 1.4 per cent to 8,508.40.
Taiwan's Taiex dropped 1.1 per cent, while India's Sensex fell 0.6 per cent.
Oil prices rose after Trump warned Iran in a social media post that “the Clock is Ticking, and they better get moving, FAST, or there won't be anything left of them” following a call with Israeli Prime Minister Benjamin Netanyahu.
Trump has set deadlines for Iran and then backed off, so investors have remained cautious about the situation in the Strait of Hormuz and how it is impacting global energy flows, including oil and gas.
The strait is still mostly closed, and the US has also imposed its own sea blockade on Iranian ports since last month.
A drone strike over the weekend on a United Arab Emirates' nuclear power plant added to worries over a potential escalation in the conflict.
Brent crude, the international standard, gained 1.9 per cent to USD 111.31 per barrel. It was trading at roughly USD 70 a barrel in late February before the start of the Iran war. Benchmark US crude was trading 2.3 per cent higher at USD 107.83 per barrel.
“Re-escalation risks are increasing,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a research note. While there has also been a pick up on shipping activities over the past week around the strait, they said, “this can change quickly.”
The pair also noted that the oil market was reacting to the lack of tangible results on the Iran war after last week's widely-watched summit between Trump and Chinese President Xi Jinping in Beijing, even as the White House said both the US and China had agreed that the Strait of Hormuz must remain open.
US officials had hoped that Beijing could use its influence, given its economic ties with Iran, to help broker a peace agreement and reopen the strait.
Trump said last week in an interview that Xi told him China “would like to be of help” in negotiating an end to the war. So far it's been unclear how Beijing might do that.
The yield on the US 10-year Treasury was at around 4.63 per cent, up from 4.47 per cent last Thursday and sharply higher than the nearly 4 per cent level it was holding at before the Iran war.
On Friday, the benchmark S&P 500 dropped 1.2 per cent from the record it set the day before. The Dow Jones Industrial Average fell 1.1 per cent and the technology-heavy Nasdaq composite lost 1.5 per cent.
In other dealings, the US dollar rose to 159.02 Japanese yen from 158.62 yen. The euro was trading at USD 1.1626, up from USD 1.1622.