A new wave of concern swept through international markets on Monday as investors faced renewed tensions in the Middle East, surging oil prices, and growing fears that central banks will be forced to keep interest rates elevated for a longer period.
Markets across Asia and the Pacific moved mostly lower following new warnings from U.S. President Donald Trump toward Iran, which brought fears of new disruptions to global energy flows — especially through the Strait of Hormuz — back into focus.
In a series of posts on the social platform Truth Social, Trump said that “time is running out” for Tehran and warned that “nothing will be left” if Iran does not respond immediately. “Time is pressing,” he wrote, without clarifying what actions he expected from the Iranian side or what the consequences would be.
Uncertainty surrounding the Middle East conflict and the deadlock in de-escalation efforts pushed oil prices higher, intensifying concerns over a new inflationary shock to the global economy.
Brent crude gained nearly 2% and climbed above $111 per barrel after already rising almost 8% the previous week, as there has been no meaningful progress toward reopening the Strait of Hormuz. U.S. WTI crude also moved higher, surpassing $107 per barrel.
The oil rally triggered another global sell-off in bond markets, as investors fear central banks may have to maintain tight monetary policies in order to contain inflation.
Yields on U.S. government bonds rose across the curve, with the 30-year Treasury reaching its highest level in nearly three years. In Japan, the yield on the 10-year government bond jumped 10 basis points to its highest level since 1996, while the 30-year Japanese government bond yield surged 20 basis points to a record high since its first issuance in 1999. Bond markets in Australia and New Zealand also came under pressure.
Meanwhile, stocks continued correcting from recent record highs, as rising yields reduced investor appetite for risk. The broader Asian stock index fell 0.8%, while futures in Europe and the United States pointed to further declines.
In Australia, the S&P/ASX 200 dropped 1.32%, while in Japan the Nikkei 225 fell 0.92% and the Topix lost 0.77%.
In South Korea, the Kospi managed to recover from early losses and rose 1.15%, boosted by a rebound in Samsung Electronics shares, while the small-cap Kosdaq fell 1.65%.
In Hong Kong, the Hang Seng lost 1.49%, while China’s CSI 300 edged slightly lower. Taiwan’s Taiex index declined 1.02%.
The U.S. dollar strengthened for a sixth consecutive session as investors moved toward safe-haven assets amid geopolitical uncertainty.
Markets fear that the prolonged Middle East crisis will keep energy prices elevated and reignite inflation globally, overturning expectations for interest rate cuts in 2026.
Traders now see another interest rate hike by the Federal Reserve by March as almost certain — a complete reversal from late February, when markets were pricing in two rate cuts during 2026.
“Inflation fears have dominated international bond markets,” said HSBC Asia chief economist Frederic Neumann, warning that as long as energy flows from the Gulf remain blocked, inflationary pressures will continue to rise.
According to -, the main cause of the market turmoil remains the deadlock in talks between the United States and Iran over the fragile ceasefire, as Tehran believes Washington is not offering meaningful concessions.
At the same time, fresh concern was sparked by a drone attack that caused a fire at a nuclear facility in the United Arab Emirates, heightening fears of further destabilization in the region.
On Wall Street, futures traded slightly lower following Friday’s difficult session, during which major indexes closed sharply down due to pressure on technology stocks and rising U.S. Treasury yields.
The S&P 500 fell 1.24%, the Nasdaq lost 1.54%, and the Dow Jones closed down more than 537 points.
The technology sector came under heavy pressure as investors locked in profits following the recent artificial intelligence rally. Intel dropped more than 6%, while AMD and Micron Technology fell 5.7% and 6.6% respectively. Nvidia declined 4.4%.
Markets are now turning their attention to Nvidia’s earnings results this week, which are seen as a crucial test of whether the artificial intelligence boom can continue supporting markets despite the geopolitical and inflationary storm.
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