Asian markets witnessed a downturn on Monday as investor sentiment soured following Iran’s retaliatory strike on Israel, heightening concerns of a broader regional conflict. The escalating geopolitical tensions prompted a flight to safety, driving up gold prices and maintaining the dollar’s strength against major currencies.
Iran’s deployment of explosive drones and missiles against Israel late Saturday, in response to a suspected Israeli attack on its consulate in Syria earlier in April, rattled markets. The threat of further escalation, potentially drawing in the United States, left the region on edge.
MSCI’s broadest index of Asia-Pacific shares outside Japan declined by 0.7% in response to the heightened geopolitical risks. Japan’s Nikkei slid by 1%, Australia’s S&P/ASX 200 index lost nearly 0.5%, and Hong Kong’s Hang Seng Index fell by 0.63%. The prevailing sense of nervousness among investors underscored the uncertainty surrounding the situation.
In the face of escalating tensions, gold prices surged by over 0.5% to $2,356.39 per ounce as investors sought refuge in the safe-haven asset. The dollar also maintained its firmness, scaling a fresh 34-year high against the yen. Growing expectations of prolonged inflationary pressures in the United States bolstered the dollar, reinforcing the perception of higher interest rates in the country.
The ongoing geopolitical tensions serve as a reminder of the fragility of global markets and the potential for sudden shifts in sentiment. Investors remain cautious amid the uncertainty, closely monitoring developments in the Middle East and their potential impact on broader market dynamics.
