[MARKET ANALYSIS] Asia-Pac stocks decline as the Iranian conflict entered a 4th day and with Trump warning of larger strikes to come

APAC Stocks: Mostly Negative

• Asia-Pac stocks are mostly lower with risk appetite weighed down by geopolitics as the Iranian conflict entered a fourth day, and with US President Trump warning of larger strikes to come.

ASX 200: -1.2%

• Index is led lower by weakness in mining and materials, with broad weakness seen in nearly all sectors aside from energy and financials.

Nikkei 225: -2.2%

• Declined with the index back beneath the 57,000 level and with sentiment not helped by a rise in the unemployment rate and as higher energy prices stoke inflationary concerns, which could narrow policy space for the BoJ.

Hang Seng & Shanghai Comp: Hang Seng +0.1% / Shanghai Comp -0.1%

• Chinese markets trade indecisively with price action rangebound despite the losses in regional peers and a fairly substantial liquidity drain by the PBoC, while participants continue to await China's annual Two Sessions conclave, which begins tomorrow.

US Equity Futures: Lower

• Trickled lower overnight amid further military action against Iran, which continued to retaliate against neighbouring US allies.

European Equity Futures -0.6%

• Indicate a negative cash market open with Euro Stoxx 50 futures down 0.6% after the cash market closed with losses of 2.5% on Monday.

The worsening conflict in Iran combined with President Trump's warnings of potential larger military strikes is weighing heavily on market sentiment across Asia-Pac stocks, leading to declines in major indices such as the ASX 200 and Nikkei 225. This geopolitical tension, alongside rising energy prices and concerns over inflation, is likely to exacerbate risk aversion and may impact monetary policy considerations in the region, particularly for the BoJ.