Stock markets in Australia, Japan, Hong Kong, Singapore, and South Korea fell after Iran’s attack on Israel.
Iran escalated tensions in the Middle East by barraging Israel with missiles and drones over the weekend, sending Asian stocks lower and raising fears of more conflict in the volatile region.
But while Israel called the attack (which Tehran said was a response to an earlier attack on the Syrian embassy) an escalation of hostilities, analysts said there was hope among traders that the crisis could be brought under control. He said there is.
This bit of optimism contributed to the drop in oil prices.
More than 300 ballistic missiles, cruise missiles and attack drones fired on Saturday, most of which were repelled by air defenses, weighing on the outlook for U.S. interest rates following better-than-expected inflation and jobs data. Concerns grew even more.
Iran has told the United Nations that the attack was a “legitimate” defensive response to the April 1 attack in Damascus that killed seven members of Iran’s Revolutionary Guards, including two generals. .
“This issue may be considered settled,” the country added on social media, but warned that “if the Israeli regime makes another mistake, Iran’s response will be quite severe.”
Israeli military spokesman Daniel Hagari said this was a “serious and dangerous escalation.”
But experts said the limited scope of the attack suggested Iran was trying to demonstrate its strength without escalating into conflict.
Meanwhile, US President Joe Biden reportedly warned Israeli Prime Minister Benjamin Netanyahu to “succeed in victory” and refrain from fighting back.
Still, Saxo’s Redmond Wong said, “All eyes will be on whether there is any response from Israel, and any day with geopolitical headlines is likely to be volatile for markets.”
Asian markets were mostly lower on Monday, but the initial heavy losses were mitigated.
Tokyo, Singapore, Mumbai, Taipei and Manila all saw declines of at least 1%, as did Hong Kong, Seoul, Sydney and Wellington.
Shanghai markets rose more than 1% after China announced new market regulation measures on Friday, which one analyst said could help long-term results.
U.S. futures rose after plunging on Friday as investors grew nervous heading into the weekend.
“The slow market reaction is likely due to the very mixed sentiment in the market at this stage,” said Hebe Chen of IG Group.
“While market participants are holding their breath to see what happens next, they are never giving up hope that last weekend’s events were just a one-off event.”
Oil prices fell, but warned that they could rise above $100 again if the crisis worsens.
“If the Israeli government follows the White House’s recommendations and abandons retaliatory measures, this war could move down the escalation ladder,” said Helima Croft of RBC Capital Markets.
While the dollar strengthened against major currencies amid a widespread risk-off mood, it hit a 34-year high against the yen as hopes for a US interest rate cut faded. Intervene to support their currency.
