Asian stocks today: Kospi, Nikkei decline following renewed US-Iran war tensions, rising crude oil prices

Asian stocks today: Asian markets declined on Monday, 13 July, as investor sentiment remained focused on rising tensions in the Middle East after the United States and Iran carried out fresh military strikes over the weekend, while Tehran announced the closure of the Strait of Hormuz.

Japan's Nikkei 225 fell 0.2%, while the broader Topix index declined 0.094%. South Korea's Kospi was down 2.47%, with the small-cap Kosdaq climbing 0.98%. Meanwhile, Australia's benchmark S&P/ASX 200 was also down 0.10% on Monday.

Asian markets opened lower on Monday as oil prices surged after the United States carried out fresh military strikes on Iran, intensifying geopolitical tensions in the Middle East.

Brent crude rose more than 3% to around $78.40 per barrel amid fears of supply disruptions. Australian bonds declined alongside US Treasury futures, while the US dollar strengthened against most major currencies. Nasdaq 100 futures also slipped 0.5%.

Precious metals came under pressure, with gold falling 1.2% to nearly $4,070 an ounce and silver dropping 2%, as rising oil prices stoked inflation concerns and reinforced expectations of higher interest rates. Bitcoin also edged lower by 0.6% to around $63,800.

The renewed geopolitical tensions arrive at a crucial time for global markets, with investors preparing for the earnings season. Major US banks, including Goldman Sachs and JPMorgan Chase, are scheduled to announce their quarterly results on Tuesday.

The US military said it launched strikes on Sunday targeting Iran’s capability to attack commercial vessels passing through the Strait of Hormuz. The action came after Iran carried out drone and missile attacks on US allies, including Kuwait, Jordan and Qatar.

Uncertainty surrounding the Strait of Hormuz further unsettled markets. While Iran claimed it had closed the key shipping route, US military officials and maritime authorities said vessels were continuing to transit through its southern channel.

Markets are also contending with persistent inflation, elevated energy prices and increasing expectations that the US Federal Reserve could resume raising interest rates. With US and global stock markets trading near record highs, investors believe there is little room for disappointing corporate earnings.

Attention will also remain on this week's US inflation data after oil posted its strongest weekly gain since mid-May, raising concerns that higher energy costs could slow the pace of disinflation. Consumer and producer price reports, the final inflation readings before the Federal Reserve's meeting later this month, are expected to provide fresh signals on the interest-rate outlook.

Money markets have increased bets on further policy tightening, with swaps pricing in nearly 40 basis points of additional Fed rate hikes by December, up from around 15 basis points in early June. Economists surveyed by Bloomberg expect both headline and core inflation to have eased slightly in June, although both are likely to remain well above the Fed's 2% target.

Federal Reserve Chair Kevin Warsh is also set to make his first appearance before Congress since assuming office, after indicating he intends to reduce the central bank's reliance on forward guidance.

Asian investors will closely monitor China's second-quarter GDP data for further evidence of slowing economic growth amid weak domestic demand. The economy is expected to have expanded 4.5% year-on-year during the quarter, bringing growth for the first half of the year to about 4.8%.

Meanwhile, attention will also turn to the Bank of Korea's monetary policy decision on Thursday. Governor Shin Hyun Song has warned that persistent inflation, resilient economic activity, a weak won and rising housing prices may warrant tighter monetary policy. Economists surveyed by Bloomberg expect the central bank to raise its benchmark interest rate to 2.75%.

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