Asian stocks fell sharply on Monday after the U.S. and Israel attacked Iran over the weekend, pushing up oil prices and spurring a broader rush out of risk and into safe havens.
Regional markets took a weak lead-in from Wall Street’s Friday session, as uncertainty over artificial intelligence and interest rates dented U.S. stocks. ESH26 fell 0.6% by 20:58 ET (01:58 GMT), trimming some of their initial losses.
Asian stocks slide as US-Iran strikes drum up risk aversion
Hong Kong’s Hang Seng index and Japan’s Nikkei 225 were among the worst performers in Asia, sliding 2.4% and 1.6%, respectively. The two were also pressured by losses in tech stocks.
Japan’s TOPIX index shed 1.6%, while China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.6% and 0.5%, respectively.
Australia’s ASX 200 fell 0.5%, Singapore’s Straits Times index shed 1.8%, while futures for India’s Nifty 50 index slid 0.8%.
Markets fell across the board after the U.S. and Israel attacked Iran over the weekend, killing hundreds, including Supreme Leader Ayatollah Khamenei and several other top officials.
Iran retaliated by launching strikes across several Middle Eastern countries and U.S. bases in the region.
The conflict showed few signs of ceasing, with U.S. and Israeli leaders signaling they will continue to attack Iran. Tehran also vowed bitter retaliation, with focus also on the country’s leadership change.
The weekend strikes saw oil prices rise sharply on Monday as markets feared supply disruptions in the Middle East. Higher crude prices also signal inflationary headwinds for several Asian countries, which heavily rely on imports of the commodity.
Tech losses weigh, China economic policy in focus
In addition to geopolitical jitters, Asian markets were also pressured by losses in technology shares, as investors remained uncertain over the impact of AI on the sector.
Software stocks in particular were nursing deep losses in February on concern over heightened competition from AI tools.
In China, focus is on the upcoming “two sessions” meetings of the country’s top political bodies, which are scheduled between March 4 and March 11. The meetings will establish the agenda for China’s 15th Five-Year Plan.
Beijing is widely expected to outline more stimulus measures, especially as Chinese economic growth slowed steadily in the 2020s.
Stronger-than-expected U.S. producer inflation data, released on Friday, stoked concerns over sticky inflation in the world’s biggest economy, which could keep interest rates in the country unchanged for longer.
Regional rate uncertainty also weighed, as markets priced out expectations of more interest rate hikes by the Bank of Japan in the near-term, especially after weak inflation data from the country.
But markets grew increasingly convinced that the Reserve Bank of Australia will raise interest rates further in the coming months, as the country grapples with a late-2025 resurgence in inflation.
Source: Investing