Asian equity markets retreated on Monday as investor confidence in a potential US-Iran peace agreement waned, reigniting concerns over Middle East stability.
The shift in geopolitical sentiment triggered a broad-based reversal in risk assets, with oil prices and bond yields climbing as traders repriced the likelihood of sustained regional conflict.
The market reaction underscores the fragility of the recent risk-on rally that followed earlier reports of a diplomatic breakthrough.
As doubts about the peace process mounted, capital rotated away from equities toward safer havens, while energy markets responded to the renewed supply disruption risk.
Bond yields rose in tandem, reflecting investor expectations that prolonged geopolitical tension could sustain inflationary pressures and delay anticipated US interest rate cuts.
This development marks a sharp reversal from the previous session, when Asian stocks rallied and oil prices fell sharply on news that the United States and Iran had reached an agreement aimed at ending nearly four months of conflict.