Asia Markets Brace for Escalation as Trump Threatens Iran Strikes

Asian financial markets opened the week on edge, with investors bracing for a potential escalation in the Middle East after U.S. President Donald Trump warned of imminent military action against Iran if the Strait of Hormuz is not reopened.

Oil prices surged at the start of trading, with Brent crude climbing above $110 per barrel, reflecting growing fears of supply disruptions in one of the world’s most critical energy corridors.

Equity markets showed mixed performance across the region. Japan’s Nikkei 225 rose around 1.2%, while South Korea’s Kospi gained nearly 2%, supported by selective buying despite broader uncertainty. Meanwhile, regional indices outside Japan posted modest gains as liquidity remained thin due to market holidays across several Asian economies.

Investor sentiment was dominated by Trump’s renewed threats, including warnings of attacks on Iranian infrastructure such as power plants and bridges if Tehran fails to meet a Tuesday deadline to reopen the Strait of Hormuz. The rhetoric has heightened concerns about retaliatory strikes and wider regional instability.

The Strait of Hormuz, which previously handled roughly one-fifth of global oil supply, remains a focal point for markets as disruptions continue to strain global energy flows.

Despite an agreement by OPEC+ to raise production quotas by 206,000 barrels per day for May, analysts noted that the increase may have limited immediate impact due to damage to oil infrastructure and transport routes in key producing regions.

Bond markets also reflected rising uncertainty. Japan’s 10-year government bond yield climbed to its highest level since 1999, as inflation concerns intensified amid elevated energy prices. U.S. Treasury yields edged higher, while the dollar held steady against major currencies.

Gold prices slipped slightly, while cryptocurrencies showed gains, indicating mixed risk sentiment among investors.

Looking ahead, markets are expected to remain highly sensitive to geopolitical developments, with upcoming U.S. economic data and central bank signals adding another layer of uncertainty to an already volatile global outlook.