Asia stock plunge after U.S. strikes Iran, U.S. stock futures decline

Asia stock markets mixed on Monday as investor sentiment turned wary over the potential retaliation from Iran following U.S. airstrikes on Sunday. The U.S. launched strikes on three Iranian nuclear sites over the weekend, fueling a fresh spike in oil prices and stoking fears of broader conflict in the Middle East. According to state media, Iran’s parliament voted on Sunday to close the Strait in response to US strikes, although the final decision lies with Iran’s Supreme National Security Council and Supreme Leader. Investors are now bracing for a potential response from Tehran, including the risk of attacks on US personnel in the region or disruption of global oil flows through the Strait of Hormuz. WTI crude oil futures rose to around $74.7 per barrel on Monday, hovering at its highest level since January, after the US launched strikes on three Iranian nuclear facilities over the weekend. Gold fell to around $3,350 per ounce on Monday as traders favored the US dollar amid escalating tensions in the Middle East. Japan ( NKY:IND ) fell 0.14% dropped 0.7% to below 38,200, while the broader Topix Index declined 0.8% to 2,750 on Monday, marking the third consecutive session of losses for Japanese equities. The Japanese yen weakened past 146 per dollar on Monday, hitting its lowest level in over five weeks, following a sharp escalation in Middle East tensions. The au Jibun Bank Japan Manufacturing PMI figures showed the manufacturing sector returned to growth for the first time since May 2024, while services activity expanded for a third consecutive month, signaling continued momentum in business activity. China ( SHCOMP ) rose 0.26% toward 3,350, while the Shenzhen Component dipped 0.1% to 9,995 on Monday, with mainland shares hitting multi-week lows as investor sentiment weakened following US airstrikes on three Iranian nuclear sites over the weekend, and the offshore yuan weakened to around 7.18 per dollar on Monday, reversing gains from the previous session. Investors also digested China’s FDI data, which showed a 13.2% y/y decline in the first five months of 2025, despite a surge in high-tech sector investments. On the domestic front, investors are closely watching the upcoming meeting of the National People’s Congress Standing Committee, where discussions are expected to focus on anti-competition legislation and possible responses to newly imposed US tariffs and rising geopolitical risks. Hong Kong ( HSI ) rose 0.27% to 23,431 in Monday morning trade, reversing gains from the previous session. Hong Kong’s current account surplus, which rose to HKD 125.2 billion in Q1 2025 from HKD 95.3 billion in the prior year. Meanwhile, the city’s annual inflation rate eased to 1.9% in May, down from April’s three-month high of 2%. India ( SENSEX ) fell 0.80% to 81,774 in Monday morning trade, halting gains from the previous session. The HSBC India Manufacturing PMI rose to 58.4 in June 2025, up from 57.6 in May and above market expectations of 57.7, according to preliminary estimates. The HSBC India Services PMI increased to 60.7 in June 2025 from 58.8 in May. Australia ( AS51 ) fell 0.39% dropped 0.6% to 8,450 on Monday, extending losses from the previous week and hitting a near three-week low. The Australian dollar depreciated past $0.640 on Monday, hitting its lowest level in a month. The S&P Global Flash Australia Manufacturing PMI held steady at 51.0 in June 2025, unchanged from May, as new business activity stalled. The S&P Global Flash Australia Services PMI Business Activity Index rose to 51.3 in June 2025. Separately, Preliminary figures for June indicated that private sector activity rose to 51.2, up from 50.5 in May—marking the ninth consecutive month of expansion and the second-fastest pace in the past ten months. Investors are now looking ahead to the release of the monthly CPI indicator for May, due later this week, for further clues on the Reserve Bank of Australia’s policy outlook. In the U.S., on Friday, all three major indexes ended closed mostly lower , as investors weighed the prospects of Federal Reserve rate cuts against rising geopolitical tensions in the Middle East. On the data front, investors will be watching for U.S. core inflation, weekly jobless claims, and PMI readings for more clues on the Fed’s next policy moves. U.S. stock futures edged lower on Monday after the US launched strikes on three Iranian nuclear sites over the weekend: Dow -0.25% ; S&P 500 -0.18% ; Nasdaq -0.21% . Currencies: ( JPY:USD ), ( CNY:USD ), ( AUD:USD ), ( INR:USD ), ( HKD:USD ), ( NZD:USD ). More on Asia: Japan’s manufacturing rebounds in June, services maintain growth amid new orders Australia’s services sector expands to 3-month high; manufacturing holds steady at 51 Japan’s core inflation accelerates for the third straight month to 3.7% PBOC keeps lending rates steady during the June fixing, as expected China’s rare earth magnet exports slump to five-year low in May

Source: Seeking Alpha