Most Asian stocks experienced a sharp decline on Monday, driven by a combination of factors including an Iranian attack on Israel and concerns over higher U.S. interest rates. Despite Chinese stocks showing resilience and rebounding from a one-month low, the overall sentiment in regional markets was negative.
Japan's Nikkei 225 was among the worst performers of the day, recording a loss of 1.2% as investors looked to secure profits near recent record highs. In South Korea, the KOSPI sank by 0.8% following lackluster trade data for March. Australia's ASX 200 also experienced a decline of 0.5%, despite a surge in metal prices that boosted mining stocks.
An Iranian strike on Israel over the weekend heightened fears of a broader conflict in the Middle East, contributing to weak risk appetite in Asian markets. The impact of the strike, however, was limited, and Tehran signaled an end to its offensive against Israel. Additionally, weak earnings from major U.S. banks and hotter-than-expected inflation data led to a reduction in expectations for early interest rate cuts.
Chinese stocks defied the overall negative trend in Asian markets, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both surging by 1.8% and 1.2% respectively. This rebound followed a period of low performance the previous week, with strong government support for local capital markets boosting investor confidence.
Despite the positive performance of Chinese stocks, concerns lingered over weak economic data from the previous week, including below-expectation inflation and trade readings for March. This, alongside the negative sentiment towards China reflected in Hong Kong markets, added to the uncertainties surrounding the region.
The Asian stock market faced a tumultuous day influenced by geopolitical tensions, concerns over U.S. interest rates, and weak economic data. While Chinese stocks showed resilience, the overall sentiment in regional markets remained cautious. Moving forward, investors will closely monitor upcoming data releases and geopolitical developments to navigate the volatile market conditions.