The Asian stock markets have faced an onslaught this week, with leading indices plunging deep into the red. India’s Sensex has fallen 1,900 points this week, while Japan’s Nikkei has fallen 1,800 points. Hong Kong’s Hang Seng index has dipped 900 points, and Singapore’s Straits Times and South Korea’s Kospi are both heading backward in the charts. Investors have faced huge losses in September, with only a few equities remaining in the green.
The weakness comes after Brent oil prices reached $108 per barrel on Friday. In addition, Crude oil reached $102 a barrel and sent the broader Asian stock market diving. The US markets are also not spared from the collateral damage, as the Dow Jones is down for four consecutive days. The Dow Jones Industrial Average fell 1,245 points this week and is also at its weakest level. The ongoing escalation in Iran is proving to be costly to investors again.
The development could affect the US stock market directly, as Crude oil inventories saw a decline of 400,000 barrels this week. The decrease brings commercial stockpiles to a stagnant position with lower sales. According to new data from the US Energy Information Administration (EIA), the average daily gasoline production fell to 9.3 million barrels. The oil industry is unable to absorb the shock, and it is being passed on to the Asian stock markets.
Also Read: US Stocks Continue Dip as Bond Yields Jump
Can the Asian Stock Market Recover Quickly?
A quick recovery for the Asian stock market is an uphill task from here. The reason is that the US and Iran are yet to finalize their peace negotiations. Aggression from both sides is flaring up and is leading to knee-jerk reactions every month. A full market recovery can only happen after the war is officially declared over. While Trump repeatedly said that the war will end after the midterm elections, Wall Street is not buying his word.