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The benchmark KOSPI dropped more than 3% to around 6,605 on Monday, extending losses to its lowest level since late April, as persistent weakness in global semiconductor stocks weighed on risk appetite. The decline tracked another losing week on Wall Street, where chipmakers remained under pressure amid ongoing concerns about AI-related capital spending and stretched valuations, casting a shadow over broader equity markets.

Australia’s 10-year government bond yield rose above 4.9%, reaching a six-week high, as the deepening conflict in the Middle East pushed oil prices higher and intensified inflation concerns. The confrontation between the US and Iran has extended from military assets to critical infrastructure, and shipping through the Strait of Hormuz has largely come to a standstill.

The People’s Bank of China left its key lending rates at record lows for a 14th consecutive month in July 2026, in line with market expectations. The decision underscored policymakers’ caution over the potential fallout from the conflict in the Middle East. It came as Q2 GDP growth slowed to its weakest pace since Q4 2022, even as exports remained buoyed by robust AI-related demand.

The Australian dollar hovered near $0.698, extending its recent pullback from a three-week high as the intensifying US-Iran conflict pressured risk assets. Demand for the safe-haven US dollar strengthened, while oil prices rose after hostilities broadened from purely military targets to key infrastructure. Shipping through the Strait of Hormuz has largely stalled, with the US enforcing a naval blockade on Iranian ports and Iran targeting vessels.

Australian shares edged up 24 points, or 0.3%, to 8,820 in early trade on Monday, snapping a two-session losing streak as gains in energy minerals, consumer services, and consumer non-durables underpinned the market. Support also came from firmer S&P 500 and Nasdaq futures, following Wall Street’s decline on Friday amid concern over Chinese advances in artificial intelligence that have raised questions about the durability of this year’s tech-led rally.

US heating oil futures rose toward $4.20 per gallon, their highest level since early April, as escalating conflict in the Middle East heightened fears of disruptions to global refined fuel supplies. Iran declared that its ceasefire with the US had effectively collapsed, with both sides expanding attacks from purely military targets to critical infrastructure, leaving little hope of a return to the fragile truce.

European natural gas prices jumped 5% on Monday to above €60 per MWh, the highest level in four months, amid growing concerns over further supply disruptions as clashes between the US and Iran intensified over the weekend. The US Central Command reported on Sunday that it had launched a new wave of strikes against Iran for the ninth night in a row, while US allies Kuwait and Bahrain also reported coming under Iranian attack.

US gasoline futures rose above $3.40 per gallon, their highest level since May 22, as mounting strikes in the Middle East intensified fears of disruptions to global refined fuel supplies. Iran announced that the ceasefire with the US was effectively over, with both sides expanding attacks beyond military targets to critical infrastructure, further undermining prospects for reviving the fragile truce.

The dollar index hovered near 101 on Monday after two consecutive sessions of gains, bolstered by escalating tensions in the Middle East that pushed oil prices higher and intensified worries about inflation and the likelihood of further interest rate increases.

US stock futures were little changed on Monday as investors looked ahead to fresh market catalysts in the coming days, with the major indexes coming off a losing week following a sharp selloff in semiconductor shares. Last week, the Nasdaq Composite fell 2.9%, while the S&P 500 and the Dow Jones declined 1.55% and 0.93%, respectively. The VanEck Semiconductor ETF slid nearly 9%, posting its third weekly loss in the past four weeks.