- The Kospi falls before paring losses as risk sentiment weakens.
- The Nikkei 225 fell around 0.3% amid a cautious reaction from the Asian market.
- The U.S. dollar index climbs about 0.5% to its highest level in a week.
The U.S. oil benchmark rebounded above $100 a barrel on Monday after U.S.-Iran peace talks collapsed and after U.S. President Donald Trump ordered a blockade of Iranian ports.
Shortly after trading began, a barrel of West Texas Intermediate for May delivery rose about 8% to $104.50, while June delivery of international benchmark Brent rose 7% to $102.
In early Asian trading, South Korea’s benchmark Kospi fell 2%, before recovering slightly, while Japan’s Nikkei was down 0.3%.
Oil prices fell and stocks soared last week after Trump agreed to a two-week ceasefire brokered by Pakistan, although its fragility quickly became apparent as Israel continued to strike Lebanon and the Strait of Hormuz remained effectively closed.
The dollar also strengthened to its highest level in a week in a broad rally against most of its peers in early Asian trading on Monday.
The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.5 percent to $99.187, its highest level since April 7.
The euro fell 0.5% to $1.1667 while the pound sterling fell 0.6% to $1.3383, while the Australian dollar fell 0.8% to $0.7014 and the New Zealand dollar fell 0.7% to $0.5798.
US President Donald Trump said on Sunday that the US Navy would begin blockading the Strait of Hormuz after marathon negotiations with Iran failed to reach a deal to end the war, jeopardizing a fragile two-week ceasefire.
U.S. Central Command said U.S. forces on Monday would begin implementing the blockade of all maritime traffic entering and exiting Iranian ports starting at 10 a.m. ET (7 p.m. Pakistan Standard Time).
“Early and limited foreign exchange trading this morning reflects a risk-off attitude, with a broad-based US dollar rally in response,” Westpac analysts wrote in a research note.
