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Investing.com-- Asian stocks fell on Monday as risk appetite was battered by the U.S. attacking Iran’s nuclear sites over the weekend, marking a potentially dire escalation in the Middle Eastern conflict.
Japanese shares fell in tandem with their peers, although local markets took some support from stronger-than-expected manufacturing purchasing managers index data.
Regional markets were spooked by a spike in oil prices, which factored into concerns of stickier inflation and higher energy costs.
S&P 500 Futures fell 0.3% in Asian trade, although analysts noted that risk assets were proving to be more resilient than expected.
Asian stocks sink as US attacks Iran facilities; oil disruption in focus
Australia’s ASX 200 was among the worst performers for the day, down nearly 0.8% despite slightly upbeat PMI data for June.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.4% and 0.1%, while Hong Kong’s Hang Seng index lost 0.6%. Beijing condemned the U.S. attack and called on Israel to reach a ceasefire in the region.
Gift Nifty 50 Futures for India’s Nifty 50 index fell 0.1%, heralding a weak open, while South Korea’s KOSPI and Singapore’s Straits Times index shed between 0.5% and 0.7%.
The U.S. attacked three key Iranian nuclear facilities over the weekend, marking America’s official entry into the renewed Israel-Iran conflict. President Donald Trump claimed that the strike had done “monumental damage” and had wiped out the facilities, although this could not be immediately verified.
Investors were now watching for how Tehran will respond to the attack. A key point of focus is the Strait of Hormuz, a major shipping channel for Asia and the Middle East, which Tehran could block.
Iranian media reports said Tehran was considering such a move. A blockade in the strait stands to greatly disrupt oil and gas shipments to several swathes of Asia and Europe, which could cause heightened economic disruption in the region.
Japan stocks fall past strong PMI data
Japan’s Nikkei 225 and TOPIX indexes lost about 0.5% each, weakening despite upbeat PMI data for June.
Japan’s manufacturing sector grew in June, its first monthly rise in 11 months, as local output and inventory growth helped offset soft demand.
Japan’s services sector also grew at a faster pace, indicating local demand was improving on the back of higher wages.
Focus this week is on Tokyo inflation data for June, due this Friday, which is set to offer more cues on local inflation. Japanese inflation has steadily risen in recent months, keeping investors on edge over more potential interest rate hikes by the Bank of Japan.