Middle East Escalation Hammers Asia Markets on July 13
Iran-US strikes, Hormuz fears, and profit-taking in tech stocks sent Asia equities sharply lower to open the week.
Asia-Pacific markets got hit hard to start the week as a perfect storm of geopolitical risk and tech profit-taking collided in early Monday trading. South Korean shares dropped more than 5%, dragged down by heavy selling in SK Hynix, while Japan's Nikkei fell in sympathy. You don't need a PhD to read this chart — risk is off, full stop.
The trigger is the Middle East. The US launched multiple waves of strikes on Iranian targets over the weekend, including attack drones, while Iran responded by targeting Jordan with ballistic missiles and closing the Strait of Hormuz. That's the jugular of global oil supply, and markets felt it immediately — oil futures ripped more than 4% higher when Globex opened Sunday night. Gold, normally a safe-haven play, actually slid more than 1%, suggesting traders may be covering margin or rotating into cash.
Read more Bitcoin Slides as U.S.-Iran Tensions Flare Despite ETF Demand →
Analysts are split on whether the Hormuz flare-up actually threatens any ceasefire truce, but the uncertainty alone is enough to keep buyers sidelined. Goldman Sachs added another layer to watch: the bank expects US core CPI to cool to 2.8% year-on-year for June, which could matter a lot for the Fed's next move — especially if energy prices are spiking at the same time. Stagflation whispers are getting louder.
On the currency side, the PBOC set its USD/CNY reference rate at 6.7972, slightly weaker than the 6.7850 estimate, signaling Beijing isn't in a rush to let the yuan strengthen. Angola also quietly added the yuan to its bank reserve currency options alongside the dollar and euro, another incremental sign of dedollarization creeping into frontier markets. Meanwhile, the BOJ looks set to hold rates steady but may lift its 2026 growth forecast — a non-event for now, but watch that inflation language carefully.
New Zealand offered one bright spot: its services sector returned to growth with a PSI reading of 50.6 in June. Small comfort when the world is watching tanker traffic through the Persian Gulf. Continue reading at Forexlive.
