APAC Market Wrap — April 7

China Equities: China’s major indexes closed in positive territory, with the Shanghai Composite edging up 0.06%, the Shenzhen Component gaining 0.69%, and the ChiNext Index rising 0.8%.

 

Sector-wise, energy storage and CPO (Co-packaged Optics) concepts saw broad strength, while the gaming sector faced a collective retreat.

 

Hong Kong Equities: The Hong Kong market extended its recent volatile streak.

 

The Hang Seng Index fell 0.90% to close at 25,660.85, the Tech Index dropped 0.79% to 4,822.01, and the H-Share Index shed 0.61% to 8,602.06.

 

Market performance remained highly fragmented; lithium batteries, automakers, and coal provided rare structural bright spots, while gaming and optical communications benchmarks dragged.

 

Japan: The Nikkei 225 slumped 0.74% to 56,502.77. Mining and ICT saw marginal gains, while rubber products and utilities faced sharp sell-offs.

 

South Korea: The KOSPI declined 0.86% to 5,808.62. Tech hardware and internet firms gained, but airlines and card issuers retreated.

 

Australia: The ASX 200 slipped 0.39% to 8,926.20. Oil, gas, and industrials trended higher, while education and aerospace stocks weakened.

 

Southeast Asia: Singapore’s STI dipped 0.11% to 4,984.17, and Malaysia’s KLCI fell 0.64% to 1,680.52. Both markets saw energy and industrial gains offset by losses in healthcare and financial services.

Key Events

The Hormuz Stranglehold: Asia Braces for Impact

 

With the Strait of Hormuz facing a "double blockade" by the U.S. and Iran, market participants fear a looming economic crisis for Asia’s energy-dependent economies.

 

Analysts at Bloomberg suggest the geopolitical escalation is shifting the global focus back to downside risks: surging oil prices, stalled growth, and intensifying inflationary pressures. On Monday, Brent crude surged 8.6% to top $103/bbl, while European gas futures spiked nearly 18%.

 

U.S. Central Command has confirmed that a blockade on Iranian ports will begin Monday at 10:00 AM ET.

 

This follows the collapse of direct negotiations between the U.S. and Iran in Pakistan. Asian nations, including Japan and South Korea, account for over 80% of the energy demand transiting the Strait. Regional governments are now scrambling for alternative supplies and implementing emergency conservation measures.

 

Trump Dismisses Negotiation Deadlines

 

Following the failed talks in Islamabad, President Trump stated he is "indifferent" to whether Tehran returns to the negotiating table.

 

He expressed disappointment in NATO’s lack of support for U.S. military actions in Iran and confirmed the blockade would proceed.

 

"If they don't come back, I don't care," Trump told reporters, noting that after 21 hours of talks in Pakistan, the U.S. has a "deeper understanding" of the situation than anyone.

 

EV Demand Surges Amid Stalled Peace Talks

 

As crude prices look set to remain elevated in the medium term, consumers in North America and Europe are pivoting back to Electric Vehicles (EVs).

 

Since the end of February, major sales platforms have reported a significant spike in EV inquiries.

 

In the U.S., used EV sales rose 12% YoY in Q1, driven largely by gas prices crossing the $4/gallon threshold. Similar trends are emerging in Germany and the UK, where EV search volume on platforms like mobile.de has tripled since early March.

Institutional Perspectives

Investinglive: Gold has shifted to a short-term bullish bias.

 

While a two-week ceasefire provided an initial boost to risk appetite, subsequent Israeli strikes in Lebanon have kept geopolitical premiums high. The market remains on edge ahead of the Islamabad talks; if negotiations fail and hostilities resume, sentiment could reverse sharply.

 

Commerzbank: The USD could weaken if Trump renews pressure on the Fed to cut rates. While the oil shock from the Iran conflict will likely have a lasting impact on price levels, Trump may attempt to force a dovish pivot to bolster approval ratings ahead of the midterms.

 

Capital Economics: If the current ceasefire holds, the Brent-WTI spread should normalize. The current inversion—where WTI trades at a premium—reflects extreme near-term tightening in the oil market and expectations for eventual supply relief in the coming months.