Asia Markets Rattle as Middle East Strikes Roil Oil and Equities
U.S. strikes on Iran and Strait of Hormuz fears sent oil surging 4%, stocks sliding globally, and gold lower on Sunday night into Monday.
Global markets opened the new week under severe pressure Sunday night after the United States launched fresh waves of strikes against Iranian targets, with U.S. Central Command citing the need to protect Gulf shipping lanes. Iran responded by targeting Jordan with ballistic missiles and closing the Strait of Hormuz, triggering a cascade of risk-off moves across every major asset class.
Oil futures surged more than 4% as Globex reopened, reflecting deep investor anxiety about potential disruptions to one of the world's most critical energy chokepoints. Gold, typically a safe-haven play during geopolitical crises, fell more than 1% — analysts suggest a hawkish Federal Reserve inflation warning combined with the dollar's strength pulled bullion lower despite the escalating conflict. U.S., European, and Asian equity markets all declined in tandem as the fighting in the Middle East showed no sign of abating.
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In Asia, South Korean shares bore some of the sharpest losses, sinking more than 5% as profit-taking hammered SK Hynix alongside the broader geopolitical selloff. Japan's Nikkei also declined. Amid the turmoil, the People's Bank of China set its USD/CNY reference rate at 6.7972, slightly weaker than the market estimate of 6.7850, while China's independent "teapot" oil refiners pivoted away from Iranian crude, opting instead for Qatari, Iraqi, and UAE supplies.
Analysts remain divided on whether the Hormuz flare-up threatens any existing truce framework, adding an additional layer of uncertainty for traders. On the policy front, Goldman Sachs projected U.S. core CPI would ease to 2.8% year-on-year for June, offering a sliver of optimism on the inflation front. Meanwhile, the Bank of Japan was reported to be considering raising its 2026 growth forecast while holding rates steady, keeping inflation risks firmly in its sights. Angola added the yuan to its list of bank reserve currency options alongside the dollar and euro, deepening its financial ties with China.
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