Stocks in Asia declined on Monday as concerns about escalating tensions in the Middle East prompted investors to seek safer investment options. Despite the attack by Iran on Israel over the weekend, U.S. futures rose while oil prices fell. The precision and limited impact of Iran’s response indicate a strategic move to minimize damage and avoid escalating tensions, according to Stephen Innes from SPI Asset Management. With slower demand from China and increasing supply, oil prices remained stable.
In Japan, the Nikkei 225 slipped 0.7%, while the Hang Seng in Hong Kong dropped 0.6%. The Shanghai Composite gained 0.8%, and markets in Australia and South Korea experienced slight declines. In the midst of a mixed earnings reporting season, the S&P 500 had its worst week since October, leading to a decrease on Wall Street. Companies like JPMorgan Chase faced pressure to improve profits amidst concerns about interest rates not providing a lift to stock prices.
Investors are closely monitoring inflation reports and the state of the economy, leading to revised forecasts for potential Federal Reserve rate cuts. Traders are now betting on only two cuts, down from earlier predictions of at least six cuts. The shift in expectations has impacted stock markets, bond yields, and the price of gold as investors navigate through uncertain economic conditions and geopolitical tensions.