“How the United States and Saudi Arabia deal with the situation will be closely watched,” Margaret Yang, market analyst at CMC Markets in Singapore told Reuters.
“If higher oil prices are here to stay, Asia’s oil reliant economies such as China, Japan, India, South Korea and the Philippines will start to feel the pain as higher energy and raw material prices add on the cost burden,” Yang added.
Asian shares retreated on weak Chinese data early on Monday.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.44% to 513.3 after data showed China’s industrial production growth skidding to its weakest pace in 17-1/2 years in August.
“If risk appetite collapses due to fears of worsening Middle East tensions in the wake of any retaliation to the ... attacks, some emerging markets could face a double whammy of pressures,” Mitul Kotecha, Singapore-based senior emerging markets strategist at TD Securities told Reuters.
China’s blue-chip index eased 0.2 percent while Hong Kong’s Hang Seng index faltered about 1.2 percent.
Middle East markets
Stock markets in the region fell on Sunday.
Saudi Arabia’s index dropped 1.1 percent with Al Rajhi Bank down 1.2 percent and petrochemical maker Saudi Basic Industries (SABIC) lower 2.6 percent.
Dubai's index was down 0.6 percent. Real estate shares were the biggest drag with the emirate's largest listed developer Emaar Properties closing 1 percent lower.
The Abu Dhabi index fell 0.4 percent as First Abu Dhabi Bank and Abu Dhabi Commercial Bank slipped 0.7 percent and 1 percent respectively.
Qatar’s index dropped 0.6 percent as Qatar National Bank fell 1.2 percent and Qatar Insurance dropped retreated 2.4 percent.
Egypt’s blue-chip index EGX30 fell 0.6 percent, Kuwait’s premier market index dropped 0.3 percent while Oman’s index traded flat and Bahrain’s index dropped 0.7 percent.
The dollar fell early on Monday.
The dollar index .DXY, which measures the greenback against a basket of six major currencies, was 0.2 percent lower at 98.053.
Gold prices rose 1 percent as investors dumped risky assets and jumped into safe havens.
Spot gold was 1.2 percent higher at $1,506.87 per ounce, as of 0050 GMT.
U.S. gold futures gained 1.1 percent to $1,516.10.
(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)
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