
Asian markets plunged on Monday, with major indices in Japan and South Korea dropping over 5%, as investors fled risk assets amid escalating Middle East tensions. Nikkei dropped below 50,700, reaching its lowest level since December of last year.
The sell-off was driven by heightened geopolitical risks after President Donald Trump threatened to strike Iran’s power infrastructure, while Iran warned of retaliation against regional energy facilities and even financial targets, raising fears of a broader conflict.
Oil prices remained volatile but elevated, with Brent around $112 and WTI near $99, as concerns over prolonged disruptions in the Strait of Hormuz intensified.
U.S. stock futures were also lower at the open, with the Dow Jones industrial average now down 10% from its record high.
Gold extended its decline for a fourth straight day, dropping to $4,300s levels, pressured by hawkish central bank policies and a stronger U.S. dollar.
In the Forex market, EUR/USD fell toward 1.1530 during Asian trading as the Euro weakened against the US Dollar, with rising geopolitical tensions in the Middle East driving risk aversion and supporting the USD.
Escalation in the conflict has increased market uncertainty. Meanwhile, the ECB held rates steady but signaled higher inflation risks due to the war, leading markets to price in potential rate hikes later this year.
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