Summary

Stocks in Asia have slid while oil prices eased but remain well above $100 a barrel, as the US and Iran continue to work towards a truce while at the same time trading blows over the Strait of Hormuz. Traders also had their eyes on the yen after the Japanese currency briefly jumped in the previous session, stoking speculation of another round of intervention from Tokyo. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent on Tuesday. Shares in Australia fell 0.4 per cent in thinned Asia trade, while markets in Japan and South Korea were closed for a holiday. Nasdaq futures and S&P 500 futures edged down about 0.1 per cent each, while EUROSTOXX 50 futures lost 0.2 per cent and FTSE futures fell 0.75 per cent. The US and Iran launched new attacks in the Gulf on Monday as they wrestled for control over the Strait of Hormuz with duelling maritime blockades, not long after US President Donald Trump launched a new effort to get stranded tankers and other ships through the vital energy-trade chokepoint. Maersk said the Alliance Fairfax, a US-flagged vehicle carrier operated by its Farrell Lines subsidiary, exited the Gulf via the Strait of Hormuz accompanied by US military assets on Monday. Still, the renewed hostilities jolted markets and served as a stark reminder that the war in the Middle East was far from over. "We started yesterday with high hopes that operation 'Project Freedom' would be, I guess, a success on the ground, that it was being pitched as more of a humanitarian effort," said Tony Sycamore, a market analyst at IG. "But as we saw, the Iranians weren't taking that bait at all ... It really signifies that the stalemate remains in place, it's been a very shaky start." In oil markets, Brent crude futures fell 0.5 per cent to $113.85 a barrel while US crude slid 1.3 per cent to $105.03, having jumped in the previous session on heightened worries about supply disruption. Geopolitics aside, investors were also bracing for earnings reports this week, with Advanced Micro Devices and Pfizer among those set to release results later in the day. Data from S&P Global Market Intelligence showed 83 per cent of S&P 500 companies that have already reported have beaten EPS estimates and 78.2 per cent of them have beaten revenue estimates. "With no signs of slowing down, AI-driven spending will likely continue to do the heavy lifting for S&P 500 earnings growth, led by the technology sector," said Jeff Buchbinder, chief equity strategist at LPL Financial. The yen was last steady at 157.22 per dollar, after Monday's short-lived surge that saw the Japanese currency touch an intraday high of 155.69. Japanese Finance Minister Satsuki Katayama on Monday spoke out about against speculative trading in foreign exchange, leaving market participants on alert for further intervention after sources told Reuters Tokyo intervened to prop up its ailing currency on Thursday. Abbas Keshvani, Asia Macro Strategist at RBC Capital Markets, said authorities could intervene again if the dollar/yen continues to test 160 which they have historically defended, noting that in 2022, Tokyo "fired three volleys of intervention in a few weeks". "We suspect intervention will merely act as a lid on USD/JPY, not a catalyst for protracted yen strength," he said. In other currencies, the Australian dollar eased 0.06 per cent to $0.7163 ahead of the Reserve Bank of Australia's interest rate decision later in the day, where a hike is widely expected. The US dollar meanwhile firmed on safe-haven demand. The outlook for Federal Reserve policy could be budged by a raft of data this week which includes April's nonfarm payrolls report on Friday. Expectations are for the US economy to have added 62,000 jobs following March's outsized 178,000 gain, though problems with seasonal adjustment make for much uncertainty. Markets currently expect the Fed to leave its policy interest rate on hold in 2026, owing to inflationary pressure from the global energy shock. Elsewhere, spot gold rose 0.2 per cent to $4,529.19 an ounce, trading well within recent ranges.