The Kospi index’s decline triggered circuit breakers and trading was halted for 20 minutes. This was the second time the circuit breakers were activated this month.
Japanese shares dropped in Tokyo. The Topix Index was down 4.7% at 3,541.55 at 9.11 am (local time), while the Nikkei was down 5.1% at 52,780.7.The Iran-Israel war has impacted Asian shares, partly due to the region’s outside dependence on fuel shipments via the Strait of Hormuz. South Korean stocks continue to bear the brunt of the sell-off as investors are taking the profits from the AI boom which drove big gains in tech shares.
As investors pared back on risk, the dollar, which has emerged as the haven of choice during this conflict, rose against almost all major currencies on Monday. Asian shares tumbled 1.8% at the open and futures contracts for the Nasdaq 100 Index fell as much as 2%.
Gold and silver dropped on inflation fears, raising the likelihood that the Federal Reserve will leave interest rates unchanged for longer, or even raise them. Treasuries extended their losses. Australian three-year bond yields surged to the highest since July 2011.
Crude oil climbed above $100 a barrel for the first time since 2022 and stocks retreated as escalating hostilities in the Middle East and worsening strain on oil shipping and infrastructure have investors bracing for fresh turbulence. The dollar advanced and Treasuries fell.
Brent rose 17% to about $108 a barrel, building on a 28% surge last week. Oil markets faced the prospect of further upheaval this week as the conflict involving Iran entered its second week, with major producers curbing output and traffic through the Strait of Hormuz — a crucial waterway for the movement of oil — effectively halted.
On Sunday, Iran pressed attacks on neighbors, while Israel struck fuel depots in Tehran and threatened the Islamic Republic’s power grid. President Donald Trump warned the US would consider targeting areas that weren’t previously aimed at. The attacks will continue “until they surrender or, more likely, completely collapse!” he said in a social media post.Meanwhile, Iran named the son of the late Ayatollah Ali Khamenei as its new supreme leader as Tehran kept up its attacks on several countries on the ninth day of the war in the Middle East.
Elsewhere, the United Arab Emirates and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz rippled through energy markets and affected global supply.
The effective closure of the narrow waterway linking the Persian Gulf to the open sea has clogged up exports from the world’s top oil-producing region.
Another key area of focus was the strength of the dollar. The Bloomberg Dollar Spot Index rose 0.5% on Monday.
On Friday in the US, nonfarm payrolls fell 92,000 last month, one of the largest declines since the pandemic. While some of the downside was expected, like a temporary dent from striking healthcare workers and a potential hit from bad weather, a wide array of industries cut jobs. The unemployment rate rose to 4.4%.
Treasuries extended their losses on Monday with the yield on the benchmark 10-year rising to 4.18%.
The Cboe Volatility Index, a gauge of implied price swings in the S&P 500 known as the VIX, surged toward 30 on Friday, pushing the spot price above its three-month futures in the largest inversion in almost a year.
With inputs from Bloomberg
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