Asia-Pacific markets retreated on Monday as geopolitical tensions escalated following United States airstrikes on Iranian nuclear sites, raising oil prices and unsettling investor sentiment.
By 11:20 am AEST (1:20 am GMT), Australia’s S&P/ASX 200 and South Korea’s Kospi 200 slipped 0.8% apiece, while Japan’s Nikkei 225 lost 0.5%.
The mixed market performance followed President Donald Trump’s announcement over the weekend that U.S. forces had bombed three nuclear sites in Iran - Fordo, Isfahan, and Natanz - marking a significant escalation in the Israel-Iran conflict.
The attacks reignited fears of a wider regional war and triggered fresh volatility in commodities and equities.
Among economic data, S&P Global released a new batch of Flash PMI readings for June that painted a cautiously optimistic picture for the Asia-Pacific region.
In Australia, the Flash Services PMI rose to 51.3 from 50.6 in May - a three-month high - indicating moderate expansion in business activity.
The Manufacturing PMI remained unchanged at 51.0. June data suggested stronger momentum in the private sector, driven by new business inflows and continued hiring.
In Japan, business activity reached a four-month high of 51.5 in June, supported by faster growth in the services sector and a return to manufacturing output expansion.
While domestic conditions improved, foreign demand remained subdued. S&P Global noted that “U.S. tariffs and lingering uncertainty over the global trade outlook continued to inhibit customer demand”.
In the United States, Wall Street ended last week on a cautious note. On Friday, the Dow Jones Industrial Average inched up 0.08%, while the S&P 500 declined 0.2% and the Nasdaq Composite fell 0.5%.
Among commodities, Brent crude fell 2.3% to close at US$77.01 per barrel, retracing earlier gains as traders assessed the potential for retaliatory action from Iran. Spot gold was little changed, easing 0.1% to US$3,368.75 per ounce.
Chinese markets were stable. The Shanghai Composite edged down 0.1% to 3,359.9, while the CSI 300 rose 0.1% to 3,846.6.
Hong Kong’s Hang Seng Index advanced 1.3% to 23,530.5, buoyed by gains in property and tech stocks. India’s BSE Sensex also climbed 1.3% to close at 82,408.2.
In Europe, the UK’s FTSE 100 fell 0.2% to 8,774.7, while Germany’s DAX gained 1.3% to 23,350.6. France’s CAC 40 added 0.5% to finish at 7,589.7.