Asian share markets tumbled Monday as US-Iran tensions escalated, pushing US Treasury yields to an eight-month high and sending global energy prices soaring.
Iran threatened retaliation against Gulf energy and water systems if the US strikes its power grid, dimming hopes for a swift end to the conflict now in its fourth week. President Donald Trump gave Iran 48 hours to reopen the Strait of Hormuz, currently blocked and dangerous for commercial shipping.
Japan's Nikkei dropped 3.9%, down over 13% for March. South Korea fell 4.5%, losing 12% this month. MSCI’s Asia-Pacific index outside Japan declined 1.2%.
Oil remained volatile: Brent crude dipped 0.2% to $111.90 a barrel but is up 55% this month. US crude held near $98.35. AMP’s Shane Oliver warned prices could reach $150 if infrastructure damage continues.
HSBC analysts noted Singapore jet fuel is up 175% this year, Asian LNG by 130%, and shipping fuel costs have spiked-driving inflation in transport and food.
Global bond markets reeled. The 10-year US Treasury yield hit 4.411%, a rise of 44 basis points since the war began. Markets now expect no Fed rate cuts in 2024-possibly hikes.
Eurozone futures fell 1.2%. S&P 500 and Nasdaq futures dipped. Higher yields strained equity valuations and raised borrowing costs for indebted governments.
The dollar gained as a safe haven. It held steady at 159.15 yen, close to a 20-month high, raising intervention concerns if it breaches 160. Gold rose 0.4% to $4,511 an ounce but remains under pressure from higher real rates.