MSCI’s broadest index of Asia-Pacific shares outside Japan rallied to a record of 831.56 points

Asian shares dropped from record highs on Thursday as investors, while oil prices rose for a fourth straight day as a fragile ceasefire in the Middle East hung in the balance.

MSCI’s broadest index of Asia-Pacific shares outside Japan rallied to a record of 831.56 points, but selling soon kicked in. It was last down 0.7 per cent.

Nikkei vaulted to a new high for a second day before dropping more than 1 per cent. Markets in Taiwan and South Korea also hit new highs and then turned lower.

China’s blue chips slid 0.3 per cent and Hang Seng index dropped 0.9 per cent.

Higher oil prices were partly to blame, with Brent crude futures up another 1.3 per cent on Thursday to US$103.18 a barrel, having climbed 3.5 per cent overnight to cross back above US$100.

Iran on Wednesday captured two container ships seeking to exit the Gulf via the Strait of Hormuz, tightening its grip on the crucial waterway, as investors watch if the fragile ceasefire in the Middle East will hold.

Nick Twidale, chief market strategist at ATFX Global, said the increased tension in the Middle East is starting to spook investors as further ship seizures erode hopes of more peace talks.

We saw the spike to record highs on the back of Wall Street’s overnight performance, but then the pullback as a bit of a reality check on what is happening in the Middle East, Twidale said.

Overnight, the S&P 500 jumped 1 per cent and the Nasdaq climbed 1.6 per cent to notch new record-closing highs, helped by a strong start to the earnings season that has eased concerns about the health of the US consumer despite rising energy prices from the Iran war.