Bangkok: Asian shares were mostly lower and US stock futures declined on Monday, while oil prices surged after US forces struck Iranian rocket launchers near the Strait of Hormuz, raising concerns about a renewed escalation in the region.
Brent crude, the international benchmark, rose 2.9 per cent to USD 90.61 a barrel early Monday, while US benchmark crude gained 2.7 per cent to USD 85.66 a barrel.
The US strike marked the first military action by American forces in the area in a month. The Trump administration had shifted its focus towards economic pressure just days earlier, and a return to open conflict could pose fresh risks for the region.
"The Middle East had finally gone quiet enough for oil traders to start sanding some of the war premium out of crude. Then Sunday arrived, with a reminder that quiet in the Strait of Hormuz is not the same as peace," Stephen Innes of SPI Asset Management said in a commentary.
Markets across Asia also came under pressure following a speech on Friday by Federal Reserve Chair Kevin Warsh, which reinforced expectations that the US central bank could raise interest rates if needed to bring inflation down.
The futures for the S&P 500 and the Dow Jones Industrial Average fell 0.3 per cent.
In Tokyo, the Nikkei 225 declined 0.4 per cent to 66,164.66, while South Korea's Kospi fell 0.5 per cent to 6,757.67.
Hong Kong's Hang Seng lost 0.4 per cent to 25,479.52, while the Shanghai Composite gained 0.4 per cent to 3,967.94.
Shares of e-commerce and fast-fashion giant Shein are due to begin trading in Hong Kong on Tuesday in what is expected to be the city's biggest initial public offering of the year. The listing comes amid a broader trend of large Chinese-founded companies raising funds in Chinese markets.
An official survey released on Monday showed that Chinese factory activity remained in contraction for a second consecutive month in August, although some indicators, including new export orders and production, showed slight improvement.
Elsewhere, Australia's S&P/ASX 200 declined 0.2 per cent to 9,076.80, while Taiwan's Taiex fell 0.4 per cent and the Sensex in India slipped 0.6 per cent.
On Friday, the S&P 500 fell 0.2 per cent, the Dow Jones Industrial Average dipped by less than 0.1 per cent and the Nasdaq Composite declined 0.5 per cent.
In a significant move in the bond market, the yield on the two-year US Treasury note, which closely tracks expectations for Federal Reserve policy, rose to 4.35 per cent from 4.22 per cent before Warsh's speech at the annual economic symposium in Jackson Hole, Wyoming.
Investors have been weighing whether the Fed will prioritise bringing inflation back to its 2 per cent target or avoid further pressure on an economy that could be weakened by higher borrowing costs.
US President Donald Trump, who appointed Warsh, has repeatedly called for lower interest rates.
Warsh said on Friday that he wanted to give financial markets fewer clues about the Fed's plans as it works to balance its two mandates of keeping inflation under control and supporting the labour market. He also said "short-term interest rates are the predominant tool" available to the central bank.
Longer-term Treasury yields also rose after some initial fluctuations, although by less than short-term yields. The 10-year Treasury yield climbed to 4.72 per cent from 4.67 per cent late Thursday, while the 30-year Treasury yield rose to 5.21 per cent from 5.19 per cent.
Longer-term bond yields have risen this summer partly because of concerns that inflation could remain elevated.
In currency trading early Monday, the US dollar fell to 159.85 Japanese yen from 160.10 yen. The dollar has rebounded following a rare coordinated intervention by the US Treasury and Japanese regulators in late July.
The euro rose to USD 1.1588 from USD 1.1580.