Asian stock markets suffered sharp losses Monday as the US-Iran war entered its fourth week with no sign of de-escalation, while a 48-hour ultimatum over the Strait of Hormuz rattled investor confidence globally.
The conflict is now delivering simultaneous shocks to energy supply, inflation expectations, and monetary policy outlooks worldwide.
Markets Buckle Under Escalating Pressure
South Korea’s Kospi led regional declines, tumbling 4.71% to 5,509. Japan’s Nikkei 225 fell as much as 4% before paring losses to 3.37%, extending its March decline to over 13%. Australia’s ASX lost 1.5%.
The selloff was driven by a convergence of escalating geopolitical risk and mounting inflation fears. President Donald Trump issued a deadline demanding Iran reopen the Strait of Hormuz — through which roughly a fifth of global oil and LNG supply normally flows — or face strikes on its power infrastructure. Tehran responded by threatening to permanently seal the waterway and target US and Israeli energy assets across the region. The deadline expires Monday evening New York time.
Rate Hike Bets Replace Cut Expectations
Brent crude traded around $112 a barrel, up over 55% since the conflict began in late February. US 10-year Treasury yields hit 4.41%, an eight-month high. Markets have entirely abandoned expectations of a Fed rate cut. Now the traders price in a small chance of rate hikes as energy-driven inflation threatens to override growth concerns.
Japan faces particular vulnerability, with approximately 90% of its oil imports transiting the strait. Semiconductor-related stocks led the Nikkei’s decline, reinforcing broader concerns that the energy shock will ripple through industrial supply chains well beyond the energy sector itself.
Bitcoin and major altcoins have tracked equity markets closely since the conflict began, selling off in tandem with stocks on risk-off days. With the Hormuz deadline imminent and no ceasefire framework in sight, that correlation shows no sign of breaking.
