(Sharecast News) - Asia-Pacific markets closed mixed on Monday, with chipmakers sharply lower as investors weighed the latest developments in the Middle East and looked ahead to a series of US corporate earnings reports due later in the week.
"Oil is back on the boil, bonds are back under pressure, and the AI rally has run straight into another geopolitical wall," said Patrick Munnelly, market strategy partner at TickMill.
"US strikes on Iran and Iranian counterstrikes across the region have pushed markets into a classic inflation-shock posture: crude higher, equities lower, the dollar firmer, and rate-cut hopes pushed further out of reach."
Iran and the US again traded airstrikes over the weekend, with Tehran targeting US facilities in multiple Gulf countries and declaring the Strait of Hormuz closed.
President Donald Trump disputed that claim on Sunday, saying the key waterway remained open to commercial traffic.
Trump had ordered airstrikes against Iran on Saturday after an Iranian attack on a commercial ship transiting the strait.
Oil prices rose as Middle East tensions kept supply risks in focus.
Brent crude futures were last up 2.79% on ICE at $78.13 per barrel, while the NYMEX quote for West Texas Intermediate rose 2.69% to $73.33.
Munnelly said Brent had jumped as conflicting reports around the Strait of Hormuz reignited fears of supply disruption.
"Hormuz is the market's pressure point," he said.
"Shipping volumes had not recovered to pre-conflict levels even before the latest escalation, so the issue is not whether the strait is fully open or fully closed. The issue is that control looks far from settled."
"In energy markets, uncertainty around the world's most important transit route is enough to keep a persistent risk premium in crude," he added.
Equity markets mixed as oil prices rise, chip stocks tumble
Japan's Nikkei 225 fell 1.92% to 67,242.73, while the broader Topix declined 0.71% to 4,007.49.
Taiyo Yuden plunged 19.21%, Yaskawa Electric Corporation dropped 14.34%, and Kioxia Holdings lost 12.86%.
In China, the Shanghai Composite fell 2.06% to 3,913.79, while the Shenzhen Component dropped 3.48% to 14,522.85.
Beijing Worldia Diamond Tools declined 12.98%, Guangzhou Fangbang Electronics lost 12.76%, and Fujian Forecam Optics fell 12.32%.
Hong Kong's Hang Seng Index was in the green, last up 0.16% at 24,213.72.
China Hongqiao Group gained 3.57%, Longfor Properties rose 3.28%, and China Resources Beer added 3.24%.
South Korea's Kospi 100 tumbled 10.1% to 8,437.24.
Samsung Electro-Mechanics plunged 18.62%, SK Square lost 17.6%, and SK Hynix fell 15.37%.
SK Hynix slumped in Seoul after its strong Wall Street debut on Friday, where the chipmaker surged 13%.
Munnelly said the immediate market reaction was "ugly", with the MSCI Asia Pacific Index down sharply and South Korea again bearing the brunt of the selling.
"Tech led the damage," he said.
"SK Hynix dropped 13% in Seoul, reversing sharply despite a strong debut for its US-listed ADRs, which had rallied 13% on their first trading day last Friday."
Munnelly said the move was not just profit-taking, but "a positioning problem colliding with a macro shock".
"Semiconductors remain the highest-beta expression of the AI trade, but they are also the first place investors cut when oil spikes, real yields rise and geopolitical risk clouds the discount-rate outlook," he said.
Australia's S&P/ASX 200 edged up 0.03% to 8,808.50.
Mesoblast gained 4.91%, Stanmore Coal rose 4.68%, and Ampol added 4.17%.
Across the Tasman Sea, New Zealand's S&P/NZX 50 returned from a long weekend to fall 0.45% to 13,723.20.
SkyCity Entertainment Group dropped 5.61%, Pacific Edge lost 3.51%, and Air New Zealand declined 2.3%.
Dollar gains on yen and Aussie, weaker against Kiwi
In currencies, the dollar was last up 0.25% on the yen to trade at JPY 162.08 as it gained 0.15% against the Aussie to AUD 1.4401, while it fell 0.38% on the Kiwi to change hands at NZD 1.7285.
Munnelly said government bonds had sold off globally, with the policy-sensitive two-year Treasury yield rising two basis points to 4.23%, its highest since February 2025, while the 10-year yield rose only modestly from Friday's 4.56% close.
"The fixed-income message is clear but nuanced: markets are not pricing a runaway inflation shock; they are pricing a Fed that has less room to cut and a greater chance of tightening again," he said.
Reporting by Josh White for Sharecast.com.
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