Markets across the Asia-Pacific region showed divergent performance as U.S. indices reversed gains, driven by geopolitical concerns over Donald Trump’s renewed focus on defense spending and a sharp drop in oil prices. Key defense and energy stocks reacted sharply to shifting macroeconomic sentiment.
- S&P 500 (SPX) declined 0.3% after a three-day rally
- Dow Jones Industrial Average (DJIA) fell 0.5% overnight
- Oil prices dropped 3.4% as WTI crude hit $71.20/bbl
- Defense stocks LMT and RTX declined 2.1% and 1.8% respectively
- Energy sector index XLE fell 2.9% amid oil sell-off
- Geopolitical sentiment linked to Trump’s defense policy statements
Asian equity markets ended the session with mixed results, reflecting growing unease over shifting U.S. political dynamics and energy market trends. The S&P 500 and Dow Jones Industrial Average both reversed a three-day rally, shedding 0.4% and 0.6% respectively, as investors recalibrated expectations following comments from Donald Trump on defense procurement policies. The renewed focus on defense contractors triggered volatility in sector-specific equities, with Lockheed Martin (LMT) down 2.1% and Raytheon Technologies (RTX) slipping 1.8% on Wall Street pre-market trading. Oil prices declined significantly, with West Texas Intermediate (WTI) crude falling 3.4% to $71.20 per barrel, contributing to pressure on energy-related equities. The S&P 500 Energy Sector Index (XLE) dropped 2.9%, marking its steepest one-day decline since November 2025. The move followed a broader sell-off in commodity markets, fueled by concerns over weakening global demand and potential shifts in U.S. energy policy under a possible second Trump administration. Market participants are closely monitoring the intersection of geopolitical rhetoric and financial markets, particularly in high-beta sectors. The defense sector’s sensitivity to policy shifts was underscored by the 1.5% decline in Northrop Grumman (NOC) and a 1.3% drop in Boeing (BA), despite strong earnings from some aerospace firms. Meanwhile, the broader S&P 500 (SPX) closed 0.3% lower, while the Dow Jones Industrial Average (DJIA) dipped 0.5%, signaling cautious investor sentiment ahead of upcoming economic data and Federal Reserve commentary.