By Ronnie Harui and Kimberley Kao
Asian equities fell Friday while oil futures rose after the U.S. and Iran exchanged fire in the Persian Gulf, undermining appetite for risky assets.
There is "a more risk-off mood, with sporadic media headlines leading to investor doubts about a solution" to the U.S.-Iran conflict, said Gavin Friend, senior markets strategist at National Australia Bank, in commentary.
Stock markets across Asia fell, with Japan's Nikkei Stock Average 0.6% lower, South Korea's Kospi losing 0.8%, and Hong Kong's Hang Seng Index declining 1.1%. Taiwan's Taiex is down 0.9%.
The declines came as Iran launched missiles, drones and small-boat attacks at U.S. warships near the Strait of Hormuz, while the U.S. responded by intercepting the threats and striking Iranian military sites responsible for the attacks, according to U.S. Central Command.
American military strikes targeted Iranian drone launch sites and coastal defense cruise missile sites and radars, U.S. officials said. Iran had launched its attacks from those locations and was preparing to do so again, according to one of the officials.
Despite the fighting, President Trump said the cease-fire remains in effect, describing the latest round of strikes as a "trifle."
The United Arab Emirates defense ministry also said it was intercepting attacks from Iran. The attacks included ballistic missiles, cruise missiles, and drones, the defense ministry said.
"Patience is wearing thin for a U.S.-Iran peace deal to be announced as risk sentiment took a small hit" from the military escalations, which prompted caution among investors, said Eugene Leow, senior rates strategist at DBS Group Research.
The markets' reaction makes sense given the rally in recent weeks supported by tech and chip heavyweights, Leow said.
"The situation continues to reflect the uncertainty that still prevails as headlines oscillate between negative and positive signals," Maybank analysts wrote in a note.
Prospects that the U.S.-Iran exchange of attacks could keep supply disruptions through the Strait of Hormuz elevated helped to boost crude oil futures on Friday. The strait is a key waterway through which one-fifth of the world's oil is typically transported.
Front-month West Texas Intermediate crude oil futures climbed 1.2% to $95.95 per barrel and front-month Brent crude oil futures rose 1.35% to $101.41 a barrel, ICE data showed.
"Global economies can probably muddle through amidst these levels of energy prices as AI-related optimism holds," DBS' Leow said.
"The fact that Brent crude prices never got close to $150 a barrel through the blockade and the UAE leaving OPEC all point to increased odds of lower oil prices," he added.
Whether Brent can "decisively break" below $100 will depend on further progress in peace negotiations, Maybank said.
Spot gold was last 0.8% higher, keeping above the $4,700 level, while bitcoin edged 0.3% lower to $79,610.67.
Write to Ronnie Harui at ronnie.harui@wsj.com
(END) Dow Jones Newswires
May 08, 2026 01:25 ET (05:25 GMT)
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