Asian stocks tumble as US Iran tensions spark risk off

Asian stock markets declined sharply on Thursday as renewed military hostilities between the United States and Iran unsettled global investors, triggering a broad shift away from riskier assets. The sell-off occurred despite a ceasefire agreement between Israel and Lebanon and overshadowed positive economic data from the United States.

MSCI's broad index of Asia-Pacific shares outside Japan fell approximately 1.6 percent. Japan’s Nikkei 225 dropped over 1.3 percent, while South Korean stocks, reopening after a holiday, fell as much as 2.6 percent. U.S. stock futures also pointed lower, indicating continued pressure. Analysts noted that financial markets had shifted back into a "risk-off" mode as tensions between Washington and Tehran intensified.

The negative sentiment extended from Wall Street, where the S&P 500 fell 0.7 percent overnight. Investors appeared to focus more on geopolitical risks than on a stronger-than-expected reading for the U.S. services sector in May. That economic improvement was reportedly driven by businesses placing orders and rebuilding inventories in anticipation of potential shortages and higher prices linked to the conflict.