Asian markets opened the week on a weak note, with investor sentiment affected by rising oil prices and escalating tensions in the ongoing US-Iran conflict. While the Nikkei fell 5%, South Korea’s Kospi fell more than 4%, although the indexes later pared some losses.On Monday, Hong Kong’s Hang Seng Index fell 412 points or 1.65% to 24,539 as of 7:50 AM IST. Shanghai and Shenzhen were also trading in the red, down 0.75% and 1.29% respectively. In Japan, the Nikkei index fell 2,467 points, or 4.6%, to 50,905 points. South Korea’s Kospi also continued to decline, reaching 5,251, down 177 points, or 3.5%.Meanwhile, in commodity markets, oil continued to rise as the conflict entered its second month with no clear solution in sight.
West Texas Intermediate (WTI) crude oil rose to $103.1, up $3.44 or 3.45%, after gaining 5.5% last week. Brent crude also rose above $110, reaching $116.4 per barrel, up $3.84, or 3.41%, based on gains of more than 4% in the previous session. The strong momentum in oil prices comes against the backdrop of the escalating regional conflict. Iran has intensified its retaliatory strikes targeting the Gulf states and the Strait of Hormuz, a vital artery for global energy supplies.
Increased hostilities have deteriorated energy markets, raising concerns about the broader global economy. Tensions escalated after Iranian Parliament Speaker Mohammad Bagher Qalibaf accused the United States of planning a ground attack, despite its public push for negotiations. His statements came after the arrival of an American warship carrying about 3,500 military personnel to the region. These developments come more than a month after the aerial bombardment of Iran by American and Israeli forces. The situation became more complex as the Iran-aligned Houthis in Yemen entered the battle and launched their first attacks on Israel since the conflict began, adding another layer of uncertainty to an already turbulent region. On the diplomatic front, Pakistan said it was preparing to host “meaningful talks” in the coming days aimed at resolving the conflict. This comes despite the fact that Tehran had previously accused Washington of preparing for a ground attack. Meanwhile, the Financial Times reported that US President Donald Trump said the US could seize Kharg Island in the Persian Gulf, a major hub for Iranian oil exports, while also indicating that a ceasefire could come quickly.