Asian-Pacific equity markets opened the week in negative territory as investors retreated amid escalating geopolitical tensions and rising oil prices.
By 11:50 am AEDT (12:50 am GMT), Japan’s benchmark Nikkei 225 led the declines, tumbling 4.8%. Australia’s S&P/ASX 200 fell 1.3%, while South Korea’s KOSPI 200 dropped 4.3%.
The sell-off follows an escalation in the Middle East conflict after Yemen’s Houthis announced they had launched ballistic missile strikes targeting Israeli military sites.
Houthi spokesperson Yahya Saree said the attacks were carried out in support of Iran and allied Hezbollah forces, marking the group’s first direct involvement in the war.
The development has intensified concerns that the conflict could widen further, disrupting global energy supplies and trade routes.
Oil prices responded sharply in early Asian trading, with Brent crude and West Texas Intermediate futures both rising 2.8% to US$108.27 and $102.31 per barrel, respectively.
The surge in energy prices has added to inflation concerns globally, complicating the outlook for central banks. In Japan, a summary of opinions from the Bank of Japan indicated policymakers are increasingly debating the need for further interest rate hikes.
“There is a risk the BOJ may unintentionally fall behind the curve, since second-round effects and rise in underlying inflation stemming from overseas developments are more likely to emerge,” one board member was quoted as saying.
The weak start in Asia followed losses on Wall Street at the end of last week. The Dow Jones Industrial Average fell 1.7% to enter correction territory, while the S&P 500 also dropped 1.7%, closing at a seven-month low. The Nasdaq Composite declined 2.2%, extending its recent correction.
Commodity markets also reflected heightened uncertainty. Brent crude rose 3.4% on Friday to settle at $105.32 per barrel, while spot gold gained 2.6% to $4,449.26 per ounce.
Elsewhere in the region, Chinese markets had finished last week on a stronger note, with the Shanghai Composite Index and CSI 300 both gaining 0.6%.
Hong Kong’s Hang Seng Index rose 0.4%, while India’s BSE Sensex fell 2.3%.
European markets ended Friday in negative territory. The UK’s FTSE 100 edged 0.1% lower, Germany’s DAX dropped 1.4%, and France’s CAC 40 declined 0.9%.
