HONG KONG -- Asian stocks retreated on Monday as concerns about a possible escalation of tensions in the Middle East rattled financial markets, pushing investors to look for safer places for their money.
U.S. futures rose and oil prices fell despite tensions roiling the Middle East, where an attack Saturday night marked the first time Iran has launched a military strike against Israel, despite decades of enmity simmering. They date back to the Islamic Revolution of 1979 in the country.
Benchmark U.S. oil fell 52 cents to $85.14 a barrel. Brent crude, the international standard, lost 48 cents to $89.97. Slower demand for PorcelainCombined with forecasts that supply growth is outstripping demand, it has kept prices in check.
"While the drone attack has grabbed the headlines, its immediate impact on global markets, particularly oil prices and inflation concerns, may be muted," said Stephen Innes, managing partner at SPI Asset Management. , in a comment. "The precision and limited lethal impact of Iran's response suggest a strategic approach aimed at minimizing damage rather than escalating tensions."
Japan's benchmark Nikkei 225 index fell 0.7% to 39,232.80.
In currency trading, the US dollar rose to 153.81 JapanThe Japanese yen rose from 153.07 yen, hitting another 34-year high as investors flocked to the traditional safe-haven currency. The euro cost $1.0663, down from $1.0635.
S from Australia&The P/ASX 200 fell 0.4% to 7,754.50. South Korea's Kospi lost 0.4% to 2,671.19.
Hong Kong's Hang Seng fell 0.6% to 16,619.67, while the Shanghai Composite gained 0.8% to 3,044.49. Elsewhere in Asia, Taiwan's Taiex was down 1.4% and India's Sensex fell 0.7% as the country prepared for a lengthy national election process.
Monday's pullback followed a Friday decline on Wall Street following a mixed start to the earnings reporting season.
the&The P 500 sank 1.5% on Friday to 5,123.41, closing out its worst week since October, when a big rally began on Wall Street. The Dow Jones Industrial Average fell 1.2% to 37,983.24, and the Nasdaq composite fell 1.6% from its record set the previous day to 16,175.09.
JPMorgan Chase was one of the market's heaviest weights, plunging 6.5% despite reporting bigger profits for the first three months of the year than analysts expected. The nation's largest bank gave a forecast for a key source of revenue this year that fell below Wall Street's estimate, predicting only modest growth.
The pressure is always on companies to produce greater profits. But it's particularly acute now, given concerns that the other main lever setting stock prices, interest rates, may not offer much momentum in the near term.
A series of reports this year have shown that both inflation and the broader economy remain higher than expected. This has forced traders to reduce forecasts for how many times the Federal Reserve could cut its main interest rate this year. Traders are largely betting on just two cuts, according to CME Group data, down from forecasts of at least six at the start of the year.
US stock indices had already hit records partly because of expectations of such cuts. Without lower interest rates, companies will need to produce higher profits to justify their stock prices, which critics say appear overpriced by several measures.
At the same time, Treasury yields in the bond market sank and the price of gold rose, which is typical when investors focus on investments considered safer.
The 10-year Treasury yield fell to 4.55% on Monday from 4.58% late Thursday.
Adding to the jitters was a preliminary report suggesting confidence among American consumers is sinking. It's an important update because American consumer spending is the main driver of the economy.
Perhaps most worrying was that American consumers are becoming more pessimistic about inflation. Its inflation forecasts for the next 12 months reached the highest level since December. Such expectations could trigger a self-fulfilling prophecy, in which purchases aimed at getting ahead of higher prices would only exacerbate inflation.
