Asian Stocks Fall as Iran Conflict Escalation Fears Rise
Asian equity markets declined on Monday as escalating concerns over the U.S.-Israel conflict with Iran triggered a broad risk-off move. Investor sentiment weakened after President Donald Trump issued an ultimatum to Tehran, raising fears of further geopolitical instability.
Energy Risks and Inflation Concerns Weigh on Markets
Markets also came under pressure from rising oil prices, which have fueled expectations of persistent global inflation. This, in turn, has increased the likelihood of more hawkish central bank policies, adding further strain on equities across the region.
Asian markets also followed a weak lead from Wall Street, where major indexes have posted four consecutive weeks of losses amid ongoing uncertainty in the Middle East. S&P 500 futures were down 0.2% in early trading.
Japan and South Korea Lead Regional Losses
Japan and South Korea emerged as the worst-performing markets, as both economies are seen as highly exposed to disruptions in global energy supply.
Japan’s Nikkei 225 and TOPIX indexes dropped between 2.8% and 3.5%, while South Korea’s KOSPI fell sharply by nearly 5%, marking the steepest losses across Asia.
Hawkish Bank of Korea Outlook Adds Pressure
South Korean equities were further weighed down by expectations of tighter monetary policy. The appointment of economist Shin Hyun-song as the new Bank of Korea governor has raised concerns about a more hawkish stance.
Shin has previously warned about excessive lending and inflation risks, and analysts at ING now expect the central bank to consider interest rate hikes later this year.
Broad Selloff Across Asian Markets
The broader region also experienced widespread declines as geopolitical tensions intensified. Trump’s 48-hour deadline for Iran to reopen the Strait of Hormuz heightened fears of a major escalation.
In response, Iran threatened to retaliate by targeting critical infrastructure across the Middle East and potentially closing the key oil shipping route entirely.
With the conflict now entering its fourth week and no clear signs of de-escalation, investor confidence remains fragile.
Major Indexes Across Asia Decline
Hong Kong’s Hang Seng index dropped 3.1%, while China’s Shanghai Composite and CSI 300 indexes each fell around 2%.
Australia’s ASX 200 declined 0.7%, Singapore’s Straits Times index fell 1.8%, and futures for India’s Nifty 50 slipped 0.3%, reflecting continued weakness across the region.
