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The Hang Seng Index dropped 1.5 per cent to 26,097.50 as of 10.57am, while a gauge of the technology stocks trading in the city sank 2.2 per cent. On the Chinese mainland, the CSI 300 Index gained less than 0.1 per cent.
A day before a two-week truce with Iran was set to expire, Trump said he would extend it indefinitely. The US would refrain from any fresh attacks, but would maintain its blockade of the Strait of Hormuz, a key marine corridor for global oil flows, he said. The extension came after Iran declined to participate in a second round of talks in Islamabad, citing unreasonable demands from the US. Trump earlier said he would not extend the ceasefire unless a deal was struck with Iran.
The dramatic turn highlights the uncertainty of a diplomatic resolution to conclude the seven-week war and the lingering risks posed by geopolitical tensions to risky assets, particularly after global stocks recouped nearly all the losses incurred by the Middle East hostilities. For the rebound to sustain, investors will need more conviction about material progress on a ceasefire and the normalisation of oil production and shipments.
“The longer talks fail to materialise, the more that temporary calm begins to look like deferred volatility rather than resolved risk,” said Stephen Innes, a managing partner at SPI Asset Management. “That is why volatility refuses to settle. The only pathway the market really cares about is whether the flow of oil through Hormuz can escape the grip of control and resume moving.”
Elsewhere in Asia, Japan’s Nikkei 225 climbed 0.5 per cent, while South Korea’s Kospi retreated 0.2 per cent and Australia’s S&P/ASX 200 lost 0.8 per cent.
