(Sharecast News) - Asia-Pacific markets were mixed on Monday as escalating conflict in Iran rattled travel stocks and pushed oil prices sharply higher, lifting energy shares across the region.
Airline stocks led declines amid Middle East airspace disruptions and airport closures, while US futures fell as investors sought safe-haven assets.
US president Donald Trump said on Sunday that combat operations in Iran would continue after three US servicepersons were killed.
"The ongoing conflict in the Middle East shook global investor confidence, causing markets to tumble and oil prices to rise," said Patrick Munnelly, market strategy partner at TickMill.
"This uncertainty sparked a rush away from riskier investments, pushing up the value of safe-haven assets like gold and the US dollar."
Japan, Hong Kong in the red
In Japan, the Nikkei 225 fell 1.35% to 58,057.24 and the Topix declined 1.02% to 3,898.42.
Financial and travel-related names were among the worst performers, with Nomura Holdings down 6.75%, Japan Airlines falling 5.89% and Shizuoka Financial Group losing 5.85%.
Munnelly noted that "Asian equities have experienced more moderate declines, though a clear risk-off sentiment is evident".
"Many indices across the region have dropped around 1.5% today, with notable sector-specific disparities.
"For example, Japan's Nikkei energy sector saw gains, while airlines with regional exposure initially plummeted by approximately 10%," underscoring the sharp divergence between oil-linked stocks and carriers exposed to regional routes.
Mainland Chinese markets were more resilient - the Shanghai Composite rose 0.47% to 4,182.59, supported by strong gains in energy and industrial names including MicroPort Endovascular MedTech, up 10.15%, Sinopec Shanghai Petrochemical Co, which gained 10.09%, and Gansu Yasheng Industrial Group, up 10.08%.
However, the Shenzhen Component edged 0.2% lower to 14,465.79.
Official data showed foreign direct investment into China fell 5.7% year-on-year to CNY 92.01bn in January, following a 9.5% decline in December.
Despite the drop in value terms, the number of newly established foreign-invested enterprises rose 25.5% to 5,306.
Manufacturing attracted CNY 26.09bn in inflows, while services drew CNY 64.04bn. Investment in high-tech industries totalled CNY 33.75bn, up 0.6% year-on-year and accounting for 36.7% of total FDI, 2.3 percentage points higher than a year earlier.
Within high-tech segments, investment in research and development and design services surged 175.1%, computer and office equipment manufacturing rose 82.4% and electronic and communication equipment manufacturing increased 3.7%.
By source, investment from Germany, Switzerland and Singapore climbed 86.6%, 57.4% and 10.9%, respectively, including flows through free ports.
In Hong Kong, the Hang Seng Index dropped 2.14% to 26,059.85, weighed down by JD Health International, which fell 5.2%, HSBC Holdings, down 5.16%, and Sunny Optical Technology Group, which lost 5.06%.
South Korean markets were closed for the March 1st Movement Day holiday.
Sydney little changed as Wellington joins global rout
Australia's S&P/ASX 200 was little changed, rising 0.03% to 9,200.90, as gains in energy and mining stocks offset broader weakness.
Genesis Minerals advanced 8.48%, Stanmore Coal rose 7.58% and Woodside Energy added 6.82% amid the surge in crude prices.
In New Zealand, the S&P/NZX 50 fell 0.48% to 13,656.65, led lower by Tourism Holdings, down 9.56%, Vista Group International, which dropped 6.35%, and Ryman Healthcare, off 3.61%.
Oil prices surge as dollar gains on regional peers
The oil market remained at the centre of investor focus.
"The oil market has taken center stage in early trading following the eruption of military conflict in the Middle East," Munnelly said.
"Brent crude surged past $80 per barrel during Asian trading hours, marking a sharp 13% rise from Friday's close of $72.48 per barrel at its peak," he commented, adding that while prices had eased slightly on reports that Iran may resume nuclear talks, risks remained skewed higher if energy infrastructure or tanker routes were disrupted.
Brent crude futures were last up 8% on ICE at $78.70 per barrel, while the NYMEX quote for West Texas Intermediate climbed 7.8% to $72.25.
In currency markets, the dollar strengthened against regional peers, last trading up 0.57% on the yen at JPY 156.94, as it rose 0.52% against the Aussie to AUD 1.4123 and gained 0.7% on the Kiwi to change hands at NZD 1.6789.
Munnelly noted that "the US dollar index rose by about 0.3% from Friday's close," reflecting the greenback's safe-haven appeal, while warning that "any escalation or prolongation of the conflict could significantly deepen risk aversion and lead to more pronounced market volatility in the days ahead."
Reporting by Josh White for Sharecast.com.
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