Most Asian stocks pulled back on Wednesday, following US President Donald Trump’s decision to officially withdraw from an international nuclear agreement with Iran.
MSCI's broadest index of Asia-Pacific shares outside Japan was down by 0.03 percent to $565.08, while the Nikkei 225 declined by 0.3 percent to ¥22,422.50, after hitting a low of ¥22,401.73 in early trades.
South Korea’s KOSPI dropped 0.2 percent to ₩2,443.98, but petroleum refiner SK Innovation Co. Ltd. showed optimism by adding 1 percent to ₩202,000.
In Greater China, Hong Kong’s Hang Seng index raised 0.2 percent to HK$30,486.00, after lingering around the flat line earlier in the session.
Mainland markets last stood on a negative area, with the Shanghai Composite falling 0.08 percent to CN¥3,158.81, while the Shenzhen Composite shed 0.09 percent to CN¥1,834.56.
Australia’s S&P/ASX 200 climbed 0.2 percent to A$6,108.00, as gains from the energy sector helped offset losses in the financial sector.
Trump Leaves Iran Nuclear Deal
Trump on Tuesday decided to exit the US from the 2015 Iran agreement, announcing that he would reinstitute extensive sanctions on the country to undermine what he described as a one-sided deal that should have never been made.
Raising the possibility of a conflict in the Middle East and going against the advice of his European allies, the Trump Administration will reinstate all sanctions on Iran suspended under the deal.
That will include a wide range of penalties that is aimed at the country’s energy sector, financial establishments and industrial sectors, its ability to insure domestic businesses, and its right to utilize US dollars and commodities.
The limits are expected to be in effect right away, which means that companies will face sanctions if they carry out any new business dealings with Iran, while foreign companies will be allowed to ease their current contracts with the country over a 90-day and 180-day periods.
Trump has also warned about imposing sanctions on any nation that would help Iran in its pursuit for nuclear weapons.
Developed by the US, five other countries, and Iran, the accord was created to prevent Iran from getting its hands on a nuclear bomb.
The deal removed restrictions that have harmed Iran’s economy and has taken away about half of its oil exports. In exchange for the sanctions lift, Tehran was to limit its nuclear program and international inspectors were to be given access to Iran’s facilities.
Iran also negotiated the nuclear agreement with China, France, Germany, Russia, and the UK.
Trump has been concerned that the deal was unable to address Iran’s ballistic missile program, its nuclear activities beyond 2025, or its involvement in the feud between Yemen and Syria.
Pulling out from the accord fulfills one of the President’s campaign pledges, though it puts US’ relationships with some of its allies at risk, pressures a considerable source of the world's oil. Iran will also be able to dismiss inspectors and continue with its nuclear activity that it has agreed to stop.
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