Asian Markets Slide as U.S. Strikes Iranian Nuclear Sites; Oil Supply Shock Looms

Asian equities fell sharply on Monday after the United States launched missile strikes on three Iranian nuclear facilities over the weekend, signaling its formal entry into the escalating Israel-Iran conflict. The attack has rattled investor confidence across the region and fueled concerns over a possible oil supply disruption through the Strait of Hormuz.

Geopolitical Shock Dampens Sentiment

The S&P 500 futures dropped 0.3% in Asian trade, reflecting global risk aversion. While markets displayed some resilience, the potential fallout from Iran's retaliation remains a key overhang.

Key regional market moves:

• ASX 200 (Australia): -0.8%

• CSI 300 (China): -0.4%

• Hang Seng (Hong Kong): -0.6%

• Nikkei 225 & TOPIX (Japan): -0.5% each

• Gift Nifty 50 (India): -0.1%

• KOSPI (South Korea): -0.5%

• Straits Times (Singapore): -0.7%

Strait of Hormuz Under Threat

Iran is reportedly weighing the option of blocking the Strait of Hormuz, which carries about 20% of global seaborne oil. If Tehran proceeds, energy costs could soar across Asia and Europe, fueling fears of persistent inflation and supply-side shocks.

To monitor potential commodity market impact, you can track real-time movements via the Commodities API.

Japan: Strong PMI Fails to Offset Global Tensions

Japan’s manufacturing PMI showed the first monthly expansion in nearly a year, and services PMI also accelerated, supported by rising wages and domestic demand. Yet, markets remained under pressure due to geopolitical risks.

Investors now await Tokyo’s inflation data later this week, which could shape the Bank of Japan’s rate path. Rising inflation and robust PMI readings suggest that rate hikes remain on the table for Japan.

Forward-Looking Concerns

With heightened military action and energy market volatility, investors should be prepared for:

• Continued rotation out of risk assets

• Higher oil and commodity-linked inflation readings

• Geopolitical risk premium in equity valuations

To assess how these risks are affecting key sectors globally, refer to the Sector Historical API.