SYDNEY: Asian markets plunged Monday as Brent crude surged to a record monthly high amid escalating Middle East tensions. Yemen's Houthi rebels launched their first attacks on Israel, widening the conflict involving Iran and raising fears of prolonged regional warfare.
Japan’s Nikkei dropped over 5%, while South Korea’s Kospi fell more than 4%. Brent crude climbed 2.98% to $115.93 a barrel, marking a 59% monthly gain-the largest since the 1990 Gulf War. The surge follows disruptions in key oil transit routes including the Strait of Hormuz and the Bab el-Mandeb.
Analysts warn that Iran’s control of strategic chokepoints offers little incentive for de-escalation, increasing pressure on the U.S. to respond forcefully. Energy shortages threaten broader economic impacts, pushing up prices for fuel, fertilizers, plastics, and food.
Investors have revised Federal Reserve rate expectations upward, now pricing in 12 basis points of tightening this year. Upcoming U.S. payroll data and inflation readings from the EU will influence central bank strategies.
U.S. Treasury yields rose sharply, with the dollar gaining strength amid market volatility. Gold held steady at $4,487 an ounce, offering minimal refuge despite growing uncertainty.