HONG KONG - Asian stocks and oil futures were mixed on Tuesday after fresh US strikes on Iran threatened fragile negotiations to reopen the Hormuz Strait.
The United States and Iran have been trying to broker a deal to end the Middle East war and reopen the crucial waterway since a fragile ceasefire came into force on April 8.
Stocks had rallied on Monday and crude futures contracts dropped below $100 after reports suggesting a deal was on the cusp of being reached.
But these hopes were dampened on Monday when US forces attacked missile sites in southern Iran and boats trying to lay mines.
Asian stocks showed a mixed picture in early trade, with Tokyo and Shanghai down around 0.5 percent.
Kuala Lumpur, Singapore, Sydney and Manila were also down.
Seoul, however, was up more than three percent, opening at a new record high over 8,000, as chipmakers, carmakers and shipbuilders continued their strong gains.
Hong Kong, Jakarta, Bangkok, Wellington and Taipei also climbed.
Oil prices fluctuated on the geopolitical uncertainty, with US benchmark West Texas Intermediate down over five percent, and international benchmark North Sea Brent slightly up.
"The market's reaction remains almost mechanical at this point," said Stephen Innes, an analyst at SPI Asset Management.
"Every incremental diplomatic headline involving Iran gets treated like another liquidity injection directly into risk appetite.
"Yet beneath the surface, the actual negotiations still resemble two traders standing on opposite sides of the pit pretending the spread has narrowed while the hardest legs of the trade remain unresolved."
Investors will be keeping an eye this week on how the US Federal Reserve reacts to key consumer inflation data and its potential effect on interest rates.
- AFP