HONG KONG: Asian equity markets experienced some of their most significant single-session losses in years on Monday, as oil prices surged above $100 a barrel for the first time since 2022. The escalation of the Iran conflict has prompted investors to flock to the dollar and move away from risk assets.
This market reaction came after escalating tensions in the Middle East drove both Brent and WTI crude oil prices above $109, triggering a sell-off in Asian markets, as well as U.S. Treasuries and gold.
The sell-off indicates a market that is increasingly pricing in a prolonged conflict. With the Strait of Hormuz effectively closed and Iranian strikes spreading throughout the Gulf, analysts warn that the worst may not yet be fully reflected in asset prices.
Japan’s Nikkei 225 plummeted 6.2% to 52,166 within the opening minutes of trade, while the broader Topix index fell 4.3%. South Korea’s Kospi sank 6.3%, heavily impacted by declines in Samsung Electronics and SK Hynix, both down approximately 7%. Australia’s S&P/ASX 200 dropped 3.3%. Futures for the S&P 500 fell 1.6%, and Nasdaq 100 futures experienced a decline of as much as 2%, signaling further challenges for U.S. markets at the opening.
WTI crude surged as high as $111, while Brent traded near $110 at the Asian market opening, both reaching their highest levels since early 2022. This spike occurred as the Strait of Hormuz continued to be effectively closed and Gulf producers began to curb output.
