Major Asian stock markets fell sharply Monday morning, dragged down by rising oil prices amid escalating tensions between the United States and Iran.
In Tokyo, the Nikkei 225 lost 3.3% to 51,638.85 points in morning trading. Seoul recorded the steepest decline in the region, with the Kospi plunging 5.1% to 5,485.50 points.
In Hong Kong, the Hang Seng dropped 3.1% to 24,497.27 points. Shanghai fell 2.1% to 3,872.84 points, while Sydney limited losses to 0.7%.
This wave of selling followed U.S. President Donald Trump’s warnings over the weekend, threatening to destroy Iranian power plants if Tehran did not fully reopen the Strait of Hormuz within 48 hours. Iran responded by saying it would retaliate against U.S. and Israeli energy infrastructure in the region.
In the foreign exchange market, the U.S. dollar rose to 159.55 yen, up from 159.22 yen on Friday, while the euro fell to 1.1545 dollars.
Oil prices remained volatile. U.S. West Texas Intermediate crude gained 31 cents to $98.54 per barrel, while Brent, the international benchmark, fell 27 cents to $111.92 per barrel, after reaching a peak of $119.50 since the start of the Middle East conflict, compared with about $70 previously.
This oil surge casts doubt on expectations of an upcoming U.S. Federal Reserve rate cut. Before the conflict began, traders were anticipating at least two cuts this year.
Meanwhile, the Japanese, European, and British central banks have kept their key rates unchanged in recent weeks.
Geopolitical concerns had already weighed on Wall Street on Friday. The S&P 500 closed down 1.5% at 6,506.48 points, marking a fourth consecutive week of losses, a first in a year. The Dow Jones dropped 443.96 points to 45,577.47, while the Nasdaq fell 2% to 21,647.61 points.
