KOSPI dropped 2.5 per cent, extending the previous session’s steep losses

Asian stocks extended declines on Tuesday as escalating Iran-U.S. tensions pushed oil prices near one-month highs, reviving inflation concerns and clouding the outlook for international interest rates.

KOSPI dropped 2.5 per cent, extending the previous session’s steep losses, as semiconductor stocks remained volatile after a sharp decline in SK Hynix’s U.S.-listed shares overnight.

Nikkei 225 slid 1 per cent, while the broader TOPIX index traded flat.

Shanghai Composite traded largely unchanged, while the blue-chip Shanghai Shenzhen CSI 300 added 0.5 per cent. Hang Seng was also muted.

Data on Tuesday showed that China’s exports and imports grew much faster than expected in June, as robust international demand for artificial intelligence-related products and technology goods offset mounting geopolitical headwinds.

S&P/ASX 200 slid 0.5 per cent, while Straits Times Index declined 1 per cent.

Futures tied to Nifty 50 were largely steady.

U.S. stock futures ticked lower in Asian trade after stock market closed sharply lower overnight.

Oil prices extended Monday’s 10 per cent rally after the U.S. president said Washington would reinstate a blockade on Iranian shipping and impose a 20 per cent charge on cargo passing through the Strait of Hormuz, while renewed strikes between the two warring countries heightened fears of disruptions to global crude supplies.

Higher oil prices reignited worries that inflation could remain higher, prompting traders to scale back expectations for monetary easing.

Markets also increased bets that the U.S. central bank could raise interest rates later this month after hawkish comments from Governor Christopher Waller, with futures implying a higher probability of a July rate hike.