Investing.com-- Asian stocks fell on Monday as growing fears of an escalation in the U.S.-Israel war on Iran, after President Donald Trump issued an ultimatum on Tehran, sparked a broad move out of risk-driven assets.
Japan and South Korea were the worst performers in the region, with the two countries, along with India, seen as relatively more vulnerable to disruptions in global energy supplies.
Persistent concerns that rising oil prices will fuel stickier global inflation and more hawkish central banks also weighed on markets, with oil prices remaining upbeat in Asian trade.
Regional markets took a weak lead-in from Wall Street, which marked four straight weeks of losses amid few signs of de-escalation in the Middle Eastern conflict. S&P 500 Futures fell 0.2% by 22:15 ET (02:15 GMT).
Japan slides, S.Korea leads losses on hawkish BOK fears
Japan's Nikkei 225 and TOPIX indexes between 2.8% and 3.5%, while South Korea's KOSPI tumbled nearly 5%. The two were the worst performers in Asia on Monday.
South Korea was hit by concerns over a more hawkish Bank of Korea in the coming months, after the government nominated economist Shin Hyun-song as the new Governor of the country's central bank.
Shin's remarks in previous interviews have struck a hawkish chord, especially his warnings against excessive lending and inflation.
ING analysts said they viewed Shin as a hawkish appointment, and that the BOK was now more likely to raise interest rates later this year.
Asia stocks sink with U.S.-Iran escalation in focus
Broader Asian markets fell across the board, as risk appetite was battered by a worsening Middle Eastern conflict.
Trump on Saturday evening issued a 48-hour deadline on Iran to either reopen the Strait of Hormuz, or else the U.S. would "obliterate" critical energy infrastructure in the country.
Iran responded by threatening to attack key energy and water infrastructure across the Middle East, and that it would completely shut Hormuz if Washington made good on its threat.
The conflict entered its fourth consecutive week and showed few signs of de-escalation, with reports early Monday showing continued strikes in Iran and Israel.
In Asia, Hong Kong's Hang Seng index slid 3.1%, while China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes lost about 2% apiece.
Australia's ASX 200 fell 0.7%, while Singapore's Straits Times index shed 1.8%.
Futures for India's Nifty 50 index fell 0.3%.