Asia Rises Despite Escalating US-Iran Conflict and Higher Oil Prices

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By Richard Fargose

Richard is an independent financial journalist who tracks financial markets and macroeconomic developments

July 13, 2026 at 1:55 AM IST

Global Mood: Cautiously Risk-on
Drivers: Hormuz Closed Again, US-Iran Escalation, Gaza Violence, Ukraine Nuclear Plant Attack

Asian markets opened broadly higher on Monday, signalling a measured risk-on mood despite renewed military exchanges between the US and Iran. Investors largely looked through the latest escalation, betting that the conflict would remain contained and that disruption to global energy supplies would be limited. Equities in Japan and South Korea advanced, while Australian shares were little changed.

Sentiment remained resilient even as Brent crude climbed nearly 4% after Iran declared the Strait of Hormuz closed following fresh US airstrikes. President Donald Trump disputed Tehran's claim, insisting the vital shipping lane remained open to commercial traffic, easing fears of an immediate supply shock. Markets appear to be pricing in continued military retaliation without a prolonged interruption to oil flows, although uncertainty remains elevated. The latest clashes highlight growing tensions over the implementation of the June 17 interim peace agreement, with both Washington and Tehran offering conflicting interpretations of shipping rights through Hormuz. Higher oil prices and geopolitical uncertainty nevertheless remain key risks for global financial markets.

THE BIG STORY

The US-Iran conflict entered a dangerous new phase Sunday as Iran declared the Strait of Hormuz closed and expanded its missile and drone strikes across Gulf states, hitting Qatar for the first time since April and targeting the UAE for the first time since May, while the US struck hundreds of Iranian targets in retaliation. The escalation in pace and geographic range marks a significant deterioration, with Bandar Abbas and Qeshm Island again under fire and an Indian crew member reported missing after a container vessel was hit. Iran said it would restart shipping permits once calm was restored, but with no diplomatic framework intact and both sides locked in an accelerating cycle of retaliation, the prospect of a negotiated pause looks increasingly distant. Oil markets face fresh supply shock risk with Hormuz effectively closed again.

Elsewhere, Israeli strikes killed at least six people in Gaza, including a nine-year-old girl, as mediators scrambled to hold together the US-brokered ceasefire amid a deadlock between Israel and Hamas — with over 1,000 Palestinians killed since the October ceasefire took hold. In Ukraine, a drone strike hit Enerhodar, home to the Zaporizhzhia nuclear power plant, killing four people in the Russian-controlled town — adding to mounting concerns over nuclear safety as both sides continue striking energy and infrastructure targets. The simultaneous flashpoints across West Asia, Gaza, and Eastern Europe paint a picture of a global security environment under severe and broadening strain.

Data Spotlight

Germany's consumer price index rose 2.3% year-on-year in June, slowing from 2.6% in May and 2.9% in April, as the overall price environment continued to ease. Prices fell 0.3% month-on-month, with apparel and textiles among the categories seeing softer pricing. Energy continued to exert upward pressure, though at a slower pace than prior months.

Russia's headline inflation rate rose to 6.0% in June from 5.3% in May, a five-month high, bucking the disinflationary trend seen across most major economies. Motor gasoline inflation surged to 19.9%, reflecting the country's most acute fuel shortage since the Soviet era, compounded by Ukrainian drone strikes on Russian refineries disrupting the West Asia-linked global supply shock. Services inflation remained elevated at 10.6%, while food inflation stayed comparatively contained at 3.4%.

Takeaway: The inflation divergence between Germany and Russia underscores how the West Asia conflict is affecting economies differently. While Germany continues its gradual disinflation, Russia faces intensifying price pressures from compounding supply shocks, with fuel shortages emerging as a critical domestic flashpoint.

WHAT HAPPENED OVERNIGHT

US stocks rise to near-record highs as SK Hynix debut reignites AI optimism

The S&P 500 gained 0.42% to end just 0.45% below its June 2 record high, while the Nasdaq rose 0.29% and the Dow added 0.29%.
For the week, the S&P 500 gained 1.2%, and the Nasdaq climbed 1.7%.
SK Hynix surged 13% above its $149 offering price to close at $170 in its Nasdaq debut, after raising over $26 billion through its US listing.
Trump said Iran had asked to continue talks, and the US had agreed, lifting sentiment despite reiterating that the June ceasefire was "over."
The Philadelphia Semiconductor Index gained 0.06% for a third straight day of gains, with tech leading S&P 500 sector gainers at up 1.65%.
Meta jumped 6% to its highest level since April, while Moderna tumbled 11% in its worst session in over a year
Delta Air Lines dropped 1.8% despite forecasting above-consensus Q3 profit, as elevated fuel costs weighed on sentiment.
Q2 earnings season kicks off next week with major bank results, and analysts project S&P 500 earnings growth of 24% year-over-year, with the index trading at 20x forward earnings.
June CPI data and Warsh's congressional testimony next week are the key near-term catalysts for Fed policy direction.

US Treasury yields ease for a second session as Iran talks resumption calms energy fears

The 10-year yield dipped to 4.54% as lower oil prices eased inflation concerns after reports the US and Iran will continue peace negotiations despite recent escalation.
Markets continue to price at least one Fed rate hike this year, with the inflation outlook remaining the key driver of policy expectations.
NY Fed President Williams said AI-driven demand is the factor he is most focused on among current inflation drivers.
Warsh announced leadership of five task forces to review key areas of Fed policymaking, signalling potential changes to how the central bank conducts monetary policy.

US Dollar little changed as West Asia uncertainty and shifting Fed bets offset each other

The dollar index held at 100.9, on track to end the week largely flat as traders assessed the fragile US-Iran situation.
Oil prices eased after reports of resumed peace negotiations, though renewed exchanges of strikes kept the conflict outlook uncertain.
Markets price a 62% probability of a September Fed hike, up from 58% a week ago but down from 70% earlier this week, reflecting the volatile swing in energy and inflation sentiment.
NY Fed President Williams said AI-driven demand is the factor he is most focused on among current US inflation drivers.

Oil settles marginally lower on Friday but posts sharp weekly gains on Hormuz uncertainty

Brent settled at $76.01 per barrel, down 0.38%, and WTI at $71.41, down 0.93%, with weekly gains of 5.5% and 4% respectively.
Prices eased after Qatari negotiators travelled to Iran to de-escalate tensions, with Trump saying he did not expect the war to restart.
Tanker traffic through Hormuz slowed following the latest escalation, though markets drew comfort from the US avoiding strikes on Iranian energy infrastructure.
The IEA warned the renewed escalation could upend its 2027 oil surplus forecast as full Hormuz reopening is further delayed.
Russian gasoline output fell to 65% of seasonal average consumption after Ukrainian strikes on energy infrastructure, prompting the IEA to downgrade its Russian production forecasts.
Multiple explosions were reported across southern Iran, including near the Bushehr nuclear plant, adding a further layer of geopolitical uncertainty.

Day’s Ledger*

Economic Data

India June CPI Data
US June Federal Budget Balance
German Buba Monthly Report

Corporate Actions

Earnings: HCL Technologies, ICICI Prudential AMC, Nuvoco Vistas Corporation, Plastiblends India, Bajaj Consumer Care

Policy

US FOMC Member Bowman Speaks
OPEC Meeting
US Fed Waller Speaks
ECB's Schnabel Speaks
UK BoE MPC Member Pill Speaks

Tickers to Watch

MANKIND PHARMA: Board approves sale of entire 100% stake in Broadway Hospitality Services to AKRK Projects LLP and Partners for 490 million rupees, as part of its non-core asset divestment strategy.
LUX INDUSTRIES: Lux Cozi Group lays foundation stone for new manufacturing facility at Dankuni, West Bengal, with planned investment of 6 billion rupees to build one of Asia's largest garment manufacturing hubs.
RITES: Consortium receives work order worth 792.2 million rupees from Patna Metro Rail Corporation for consultancy services on the Patna Metro Rail Construction Project.
JSW ENERGY: Subsidiary JSW Energy PSP Eleven (JEPEL) secures orders worth 4.4374 billion rupees for 200 MW/400 MWh BESS from Bondada Renewable Energy; JEPEL operates a 5 GWh battery assembly plant in Pune.
STATE BANK OF INDIA: Subsidiary SBI Funds Management cuts IPO size to 98.129 billion rupees from 116.929 billion rupees after a 18.80 billion rupees pre-IPO placement to 30 investors; revised offer size at 17.09 crore shares vs 20.37 crore earlier.
POWERICA: Wins GUVNL e-reverse auction for 250 MW wind power projects, securing a 50 MW project at a discovered tariff of Rs 3.51/unit, 2.77% below the tender's starting tariff.
INNOVISION: Receives LoA worth 275.2 million rupees from NHAI as user fee agency for Kariyamangalam fee plaza on the Tindivanam-Krishnagiri section, Tamil Nadu, including maintenance of adjacent toilet blocks.
NTPC: Board approves investment for Lara Super Thermal Power Project Stage III (2x800 MW) at estimated cost of 204.567 billion rupees.
NMDC: Revises iron ore prices effective July 10 — Baila Lump at Rs 5,450/tonne, Baila Fines at Rs 4,700/tonne.
STERLITE TECHNOLOGIES: Wins European patent dispute against Fujikura as EPO Technical Board of Appeal revokes Fujikura's European Patent EP 3796060 in full, resolving the related UK patent dispute in Sterlite's favour.
PACE DIGITEK: Subsidiary Lineage Power signs MoU with Bondada Renewable Energy for supply of BESS, including DC blocks, C&I BESS cabinets, residential BESS, PCS, EMS and battery containers.
POWER GRID CORPORATION OF INDIA: Declared successful bidder under TBCB for inter-state transmission system for Krishnagiri REZ Phase-I project on BOOT basis; project includes two new 765/400 kV substations in Andhra Pradesh and transmission lines across AP, Telangana and Karnataka.
SWIGGY: Received FSSAI prohibition order on July 6 for its Toing platform over licence particulars updation (no food safety concerns); addressed the issue and received modified FSSAI licence on July 9.
JINDAL STEEL: CEO Gautam Malhotra resigns, effective July 15.
HITECH CORPORATION: Shareholders reappoint Malav Dani as Managing Director for a further five-year term effective August 5, 2026.
INTERGLOBE AVIATION: DGCA issues a warning letter over cargo spillage detected post-flight arrival in January 2026, and SOP/dangerous goods rule deviations; company says no significant financial or operational impact and will submit an action-taken report.

Must Read

(*Compiled from various media sources)

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