Sell-offs sweep Hong Kong and Asian markets as gold, oil rise on Iran war

Panic swept markets in Hong Kong and elsewhere in Asia, while oil and gold jumped on Monday, as a flare-up in geopolitical tensions put investors on edge after the US strikes on Iran. The risk-averse mood adds to the uncertainty and volatility surrounding global equities, which have recently been rattled by fears of displacement by artificial intelligence after trading at elevated levels. Iran virtually shut the Strait of Hormuz, through which about a fifth of the world’s shipments of oil and gas flow, after the war broke out. Strained energy supply will fuel a resurgence in inflation globally and could cloud the outlook for economic growth. “We expect equities to move lower in the immediate aftermath of these events [as] most of the effect is likely to be felt through higher oil prices,” said Benjamin Jones, global head of research at US asset-management firm Invesco. “Many emerging markets that rely on foreign energy sources could be at risk. We also note that many Asian economies rely on imports from the Middle East, which we think may result in downward pressure on local assets.” Brent crude surged as much as 14 per cent to US$82.37 a barrel, on course for its highest level since January 2025, while gold rose 2.5 per cent to US$5,408.33 an ounce, bolstering its status as a haven asset. The US and Israel bombed targets across Iran on Saturday, while the Islamic nation retaliated with strikes on American military bases and cities in the Middle East and Israel. Iran’s supreme leader Ayatollah Ali Khamenei was killed in the assault. The Hang Seng Index closed 2.1 per cent lower at 26,059.85. At one point, the gauge plunged by as much as 2.8 per cent, the biggest decline since April 7, when US President Donald Trump’s “Liberation Day” tariff announcement sent the benchmark plunging 13 per cent. A prolonged confrontation in the Middle East might drive oil prices above US$100 a barrel, which could increase the risk of a global slowdown, lead to a pause in interest-rate cuts by the Federal Reserve and erode company earnings, according to commodity analysts. The Hong Kong market endured broad-based turbulence, with 76 stocks in the 88-member Hang Seng Index falling. Oil producers bucked the trend. CNOOC rallied 5.6 per cent to HK$26.74 and PetroChina surged 4.1 per cent to HK$9.93. Elsewhere in Asia, Japan’s Nikkei 225 slid 1.4 per cent, South Korea’s Kospi retreated 1 per cent and Taiwan’s Taiex lost 0.9 per cent. Mainland China was an exception, as the CSI 300 Index rose 0.4 per cent and the Shanghai Composite Index added 0.5 per cent. “Asia and emerging markets face a dual shock of higher oil prices, which tend to have an inflation and tax effect, and [lead to] a broader pullback in risk appetite,” said Charu Chanana, chief investment strategist at Saxo Markets. Asian economies were mostly dependent on oil and gas imports, with every US$10 increase in oil prices cutting economic growth in the region by 20 to 30 basis points, according to Morgan Stanley. Thailand, South Korea, Taiwan and India were particularly vulnerable to downside growth risks because of their reliance on energy imports, it said. For now, the repercussions on China seemed to be muted, as the world’s second-largest economy had estimated oil reserves of as much as 1.5 billion barrels, and the disruption from Iran could be offset by supply from Russia, according to Michael Langham, an economist at Aberdeen Investments. Still, a protracted war would exacerbate the macro picture of the nation, he added. Sectorwise, energy producers, shipping lines, defence contractors and insurers were likely to benefit from the military strife, while cyclical sectors sensitive to fuel prices, such as airlines, would be under pressure, according to Franklin Templeton. While history showed that Middle East conflicts triggered sharp but short-lived market downturns, the tail risk to stocks should not be ignored, given that many markets traded near record highs and stretched valuations, according to Julius Baer. That left limited room for disappointment and increased the risk of near-term derating if escalation persisted, the bank said. “A sustained rise in oil prices would tighten financial conditions, pressure margins and reawaken stagflation concerns, even in a structurally less oil-intensive global economy,” said Mathieu Racheter, head of equity strategy research at Julius Baer.

Sell-offs sweep Hong Kong and Asian markets as gold, oil rise on Iran war

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Crude oil jumps as much as 14 per cent to the highest level since January 2025, while gold gains 2.5 per cent on haven demand

Crude oil jumps as much as 14 per cent to the highest level since January 2025, while gold gains 2.5 per cent on haven demand