Asian equity markets fell sharply as oil prices climbed further in response to escalating conflict in the Middle East, prompting investor concern about the potential for renewed global inflation and extended energy supply disruption.
Across the region, markets opened deeply in the red. Japan's Nikkei 225 registered a fall of more than 7%, reaching a two-month low after already declining by over 5% in the prior week. South Korea's KOSPI plunged in early trading by more than 8%, a drop large enough to trigger circuit breakers and pause trading for 20 minutes; it was last reported about 7.9% lower.
Commodity markets were a central factor in the rout. Benchmark crude prices climbed above $100 a barrel and at one point briefly touched $111 - one of the most pronounced oil spikes in recent years. That jump in energy prices has sharpened concerns that global inflation could pick up again at a time when many central banks were preparing to ease monetary policy.
U.S. stock futures were also weaker, falling by more than 2% as of 02:27 GMT, on the back of last week's declines in major U.S. indexes. The moves suggest market participants are pricing in a period of greater economic uncertainty driven by both geopolitical developments and commodity-price shocks.
Geopolitical developments
The conflict in the Middle East entered a second week with little sign of de-escalation, a dynamic that market participants say raises the prospect of a prolonged interruption to global energy flows. In a separate development that markets interpreted as an indicator of continuity in Iran's political stance, Iran named Mojtaba Khamenei as successor to his father Ali Khamenei as supreme leader - a step viewed by some investors as consistent with ongoing hardline policies and extended geopolitical tensions.
China inflation data and regional market impacts
Investors also digested recent Chinese inflation figures that sent a mixed message on domestic demand trends. China's consumer price index rose 1.3% year-on-year in February, an acceleration from January's modest gain. Producer prices continued to decline, though the pace of deflation eased. Together, these readings point to tentative stabilization in domestic demand, even as higher global energy costs risk adding fresh cost pressures for businesses and consumers.
Regional indices were broadly lower: China's Shanghai Composite and the Shanghai Shenzhen CSI 300 each slipped about 2%, while Hong Kong's Hang Seng eased 3.5%. In Australia, the S&P/ASX 200 dropped roughly 4%, and Singapore's Straits Times Index fell about 3%. Futures linked to India's Nifty 50 were down by more than 2%.
With oil prices surging and geopolitical tensions intensifying, volatility persisted across markets. Traders and strategists are watching both energy markets and inflation indicators closely as they reassess risk, positioning, and the implications for monetary policy paths that many central banks had been considering easing.