Asian Equities Sink as Energy Infrastructure Threats Rattle Investors

GLOBAL MOOD: Extreme Risk-Off
Drivers: Trump's 48-hour Hormuz ultimatum, Brent hits four-year high

 Asian markets tumbled on Monday, signalling a sharp risk-off mood as the Middle East conflict entered its fourth week and geopolitical tensions escalated dramatically.

Investor sentiment weakened after the US warned Iran it would target power plants if the Strait of Hormuz is not reopened, while Tehran threatened retaliation against regional energy infrastructure.

The heightened rhetoric pushed investors toward safety, triggering steep losses across Japan, South Korea and other regional markets. With the risk of prolonged energy disruptions rising, markets are increasingly pricing in higher oil prices and a deeper global growth shock.

TODAY’S WATCHLIST
 - Euro Consumer Confidence Flash Data
 - ECB Lane Speech

THE BIG STORY
The US-Iran war lurched toward a dangerous new escalation on the weekend as Trump threatened to "obliterate" Iran's power plants unless Tehran fully reopened the Strait of Hormuz within 48 hours, a dramatic hardening of position that came barely 24 hours after he spoke of "winding down" the conflict. Iran responded by threatening to attack US infrastructure and energy facilities across the Gulf, with Parliament Speaker Mohammad Baqer Qalibaf warning that critical Gulf energy infrastructure could be "irreversibly destroyed" if Iranian power plants were struck. The exchange of threats sent fresh shockwaves through energy markets already pricing a structural supply shock, with US Marines and heavy landing craft continuing to head toward the region.

On the ground, air raid sirens sounded across Israel in the early hours of Sunday as Iranian missiles targeted the southern towns of Arad and Dimona, injuring scores of people. Israel responded with fresh strikes on Tehran. Separately, Iran's UN maritime representative Ali Mousavi offered a partial concession, stating the Strait remains open to all vessels except those linked to "Iran's enemies" and expressing willingness to cooperate with the IMO on maritime safety for non-hostile shipping. The statement suggests Tehran is attempting to draw a line between targeted economic pressure and a full blockade — but Trump's 48-hour ultimatum has dramatically narrowed the window for any diplomatic manoeuvre. With US forces massing in the region and both sides threatening energy infrastructure strikes, the coming days represent the most dangerous escalation point of the four-week-old conflict.

Data Spotlight 
The UK's CBI industrial order book balance improved marginally to -27 in March from -28 in February, edging above the -29 forecast and marking the slowest pace of order decline since September. Output expectations for the next three months recovered to -3 from -12, while expected price growth eased notably to +12 from +26. However, CBI senior economist Cameron Martin cautioned that the West Asia conflict is driving up energy costs and threatening fresh supply chain disruptions, adding to existing cost pressures on UK manufacturers at a time when order books remain deeply negative.

Takeaway:
The marginal improvement in UK industrial orders is a thin silver lining in an otherwise fragile manufacturing picture. The sharp easing in price growth expectations is counterintuitive given surging oil prices, suggesting manufacturers may be absorbing costs rather than passing them on a margin squeeze that could show up in earnings and investment decisions in the months ahead.

WHAT HAPPENED OVERNIGHT

• US stocks posts sharp losses as S&P 500 hits six-month low on Iran war fears
  • The S&P 500 fell 1.51% to 6,506,  its lowest since September, while the Nasdaq slumped 2.01% to 21,647, now nearly 10% below its October record high.
  • The Dow declined 0.96% to 45,577 as the West Asia conflict entered its fourth week with no resolution in sight.
  • Nvidia and Tesla each lost over 3%, while Alphabet, Meta, and Microsoft all fell around 2%, Wall Street's most valuable companies leading the selloff.
  • The US military deploying an amphibious assault ship with thousands of additional Marines and sailors to the region signalled escalation over resolution.
  • Iran's new Supreme Leader hailing "unity" and "resistance" offered zero diplomatic comfort to markets pricing a prolonged conflict.
  • The 10-year yield surging to 4.37% directly pressured high-valuation tech stocks, which are most sensitive to rising discount rates.
  • The Nasdaq's near-10% drawdown from record highs marks a technical correction, with further downside risk if oil holds above $110 and rate-cut hopes continue to fade.

• US Treasury jumps to 4.37%, highest since July 2025, as inflation fears and Fed hawkishness bite 
  • The 10-year yield rose 10 bps to 4.37%, its highest since July 2025 as energy-driven inflation fears and Fed hawkishness combined.
  • The 2-year yield also climbed nearly 10 bps to 3.9%, reflecting a broad reprice of the Fed's near-term rate path.
  • Oil holding near 2022 highs despite volatile swings kept the inflation risk premium firmly embedded in Treasury pricing.
  • Updated Fed projections pointing to only one cut this year are being increasingly questioned by markets as energy costs accelerate.
  • The parallel 10 bps move across both the 2-year and 10-year signals a parallel shift in the yield curve rather than steepening as markets repricing the entire rate path rather than just long-term inflation expectations.

• US Dollar rebounds to 99.8 as Iran war drags on and hawkish central banks support greenback
  • The US dollar index rose to 99.8, recovering sharply after Thursday's 0.8% decline as slim prospects for a swift conflict resolution restored safe-haven demand.
  • Oil holding near 2022 highs kept inflation concerns front and centre, supporting the dollar's higher-for-longer appeal.
  • Global central banks adopting a more hawkish stance in response to the energy shock is broadly dollar-supportive, as peers face more severe inflation passthrough from oil.
  • The dollar's recovery from Thursday's dip underscores its role as the default safe haven in a world where the conflict timeline remains deeply uncertain.
  • With Iraq declaring force majeure and US troop deployments expanding, the conditions driving dollar safe-haven demand show no signs of abating.

• Crude oil surges to four-year high of $112 as Iraq declares force majeure and US deploys more troops
  • Brent crude settled up 3.26% at $112.19/barrel, its highest since July 2022 and firmly above the $100 psychological threshold for a second consecutive week.
  • WTI settled up 2.27% at $98.32/barrel, with the more actively traded second-month contract gaining 2.8% to $98.23.
  • Iraq declared force majeure on all foreign-developed oilfields, a dramatic supply shock adding to the West Asia disruption already choking global energy flows.
  • The US announced deployment of thousands of additional Marines and sailors to the region, signalling military escalation rather than de-escalation.
  • The Iraq force majeure effectively removes another major OPEC producer from global supply at the worst possible moment, with the Strait of Hormuz still closed and the Saudi Red Sea port under attack.
    
    

 Day’s Ledger*

Economic Data

• ECB Wage Tracker
• Euro Consumer Confidence Flash Data

Corporate Actions

• Biogen Pharmachem board to consider bonus share issue
• Gconnect Logitech board to consider fund raising 
• GTV Engineering board to consider fund raising 
• Hudco board to consider borrowing plan
• Sobhagya Mercantile board to consider fund raising
• Vedanta board to consider dividend 

Policy

• ECB Lane Speech
• ECB Cipollone Speech 

Tickers to Watch

• Little impact of West Asia conflict on biz, 95% projects on, says L&T
• Tata Capital gets ₹413 cr tax demand; to challenge reassessment order
• Vedanta moves NCLAT against Adani bid to acquire Jaiprakash Associates
• Kotak Mahindra Capital divests nearly 31% stake in Infina Finance
• Dredging Corp aiming to more than double turnover to ₹3,000 cr: CEO
• 'Skoda Auto India eyeing up to 12% sales growth in 2026 on product push
• JSW MG Motor bets on non-metros to accelerate sales of EV Windsor

Must Read

• Trump, Iran escalate conflict with threats to energy, water facilities
• Japan says not considering unilateral negotiations with Iran on Hormuz
• Iran threatens Hormuz shutdown over Trump's energy strike warning
• Indian firms facing shipment delays, input shortages amid Iran war: CII
• Govt raises commercial LPG allocation to 50% as gas crisis hits sectors
• Diesel price hike hits sugar mills; mining sector flags cost impact

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day

When a hashtag#bank chairman behaved in a churlish manner

Krishnadevan V writes, Atanu Chakraborty's exit from HDFC Bank's chairmanship was a masterclass in how not to leave.

A career bureaucrat, who was once economic affairs secretary in the Indian Ministry of Finance should have understood that words from authority carry consequence, and timing carries more.

Yet he resigned with immediate effect, cited "values and ethics" without specifics, watched the stock hit a 52-week low — and then walked back any wrongdoing charge within 24 hours on television.

The suspicion he seeded has no reversal button. Reputation risk in banking is rarely loud and immediate. It is a slow, corrosive drip.

This isn't just about one chairman's messy exit. It exposes a regulatory gap -the Reserve Bank of India (RBI) has rigorous rules governing entry into bank boardrooms, but none disciplining exit.

(*Compiled from various media sources)