Asia stocks sink after US attacks Iran.
Asian stocks fell on Monday as risk appetite was battered by the U.S. attacking Iran’s nuclear sites over the weekend, marking a potentially dire escalation in the Middle Eastern conflict.
Japanese shares fell in tandem with their peers, although local markets took some support from stronger-than-expected manufacturing purchasing managers index data.
Regional markets were spooked by a spike in oil prices, which factored into concerns of stickier inflation and higher energy costs.
S&P 500 Futures fell 0.3% in Asian trade, although analysts noted that risk assets were proving to be more resilient than expected.
Asian stocks sink as US attacks Iran facilities; oil disruption in focus
Australia’s ASX 200 was among the worst performers for the day, down nearly 0.8% despite slightly upbeat PMI data for June.
Oil prices surge after US-Iran strike.
Oil prices rose sharply in early Asian trade on Monday as U.S. strikes on Iran ramped up fears of supply disruptions in the Middle East, although crude did pare some of its early gains.
Brent oil futures for August rose 2.4% to $79.0 a barrel, while West Texas Intermediate crude futures rose 2.5% to $73.84 a barrel by 20:05 ET (00:05 GMT). Both contracts had initially surged as high as 4% to four-month highs, with Brent briefly rising as high as $81 a barrel.
Oil pared some early gains amid uncertainty over just how Iran will respond, and what the White House’s stance was towards a conflict with the Islamic Republic.
US attacks Iran nuclear facilities, Tehran response in focus
Washington over the weekend carried out a series of strikes targeting Iran’s three key nuclear facilities, drawing ire and threats of retaliation from the Islamic republic. Iran was seen launching some attacks against Israel in the early hours of Monday.
Iranian media reported that the country was considering blocking the Strait of Hormuz in retaliation for the strikes.
Asia FX weakens, dollar gains.
Most Asian currencies weakened on Monday, while the dollar firmed after the U.S. over the weekend attacked three key nuclear facilities in Iran, putting markets on edge over Tehran’s response.
The greenback benefited chiefly from increased safe haven demand, with other havens such as gold and the Japanese yen losing ground.
Asian currencies were also nursing some losses from last week, following hawkish signals from the Federal Reserve. A slew of Fed officials are set to speak in the coming days, potentially offering up more cues on the path of interest rates.
Fed Chair Jerome Powell will testify before Congress on Tuesday and Wednesday.
Regional currencies also largely weakened past strong economic prints from Australia and Japan.
Dollar gains, Asia FX weakens after US-Iran attack
The dollar index and dollar index futures both rose 0.3% each in Asian trade, extending mild gains from the prior week.
The greenback was buoyed chiefly by safe haven demand, as traders waited to see just how Tehran will respond to the attacks. U.S. President Donald Trump claimed that the attacks had wiped out Iran’s nuclear facilities, essentially quashing the country’s nuclear ambitions.
Trump had claimed that Iran was building a nuclear weapon, while Tehran had repeatedly asserted that this was not the case.
Iranian media reports said that the country was now planning to block the Strait of Hormuz as retaliation for the attacks. Such a move stands to greatly disrupt oil supplies to swathes of Asia and Europe, which could in turn spur economic disruptions.
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