TOKYO — Asian equity markets opened sharply lower on Monday as a weekend of escalating military exchanges between Iran, Israel and U.S.-aligned Gulf states sent Brent crude futures above $125 a barrel and pushed investors into defensive assets, threatening to extend a global selloff that has already erased trillions of dollars in market value since the conflict began roughly a month ago.

Nikkei 225 futures, which began trading in Singapore on Sunday afternoon Eastern time, fell as much as 3.1 percent before paring losses to 2.6 percent shortly after the Tokyo cash session opened at 9 a.m. local time. South Korea’s KOSPI shed 2.9 percent in the opening minutes, weighed down by chipmakers and shipping firms, while Hang Seng futures pointed to a decline of 2.4 percent ahead of the Hong Kong open. Australia’s S&P/ASX 200, the first major regional benchmark to begin cash trading, slumped 2.1 percent.

The losses came after a turbulent Saturday in which a Houthi missile was launched toward Israeli territory, Iran struck a Saudi airbase, and Emirati and Saudi air defenses intercepted Iranian missiles aimed at Gulf infrastructure. Iran’s foreign minister warned in a televised statement Sunday that the United States and its partners would “pay a heavy price” for continued strikes, language traders said had hardened expectations of a prolonged conflict.

“What we are seeing is a classic risk-off open, but with an oil shock layered on top,” said Pradeep Menon, head of Asia macro strategy at Crescent Pacific Advisors in Singapore. “You have equities being sold, you have the yen catching a safe-haven bid, and you have commodity-importing currencies getting hammered. That is the textbook signature of a war premium being repriced into Asian assets.”

Brent crude for May delivery rose $4.80, or about 4 percent, to trade at $125.30 a barrel in early Asian dealing, the highest level since 2022. West Texas Intermediate climbed above $121. Traders cited continued disruption in the Strait of Hormuz, where insurance premiums for tankers have roughly tripled over the past two weeks, as well as fresh concerns about pipeline infrastructure along the western Saudi coast.

The Japanese yen strengthened to 142.40 against the dollar from 144.10 at Friday’s New York close, its strongest level in five weeks, as investors rotated into the currency’s traditional role as a refuge during geopolitical stress. The Australian dollar, by contrast, fell 0.9 percent to 62.10 U.S. cents, pressured by Australia’s status as a net energy importer of refined fuels and by softer demand expectations from Chinese industry.

A senior official at the Bank of Japan, speaking on the condition of anonymity because the discussions were internal, said the central bank was monitoring currency moves but had no immediate plans to intervene. “The yen’s appreciation reflects global risk aversion rather than domestic fundamentals,” the official said. “Our focus remains on the inflationary pass-through from energy prices, which is a far more consequential channel for the Japanese economy than short-term currency volatility.”

Japanese refiners and utilities were among the hardest-hit equities at the open, with Eneos Holdings down 4.2 percent and Tokyo Electric Power off 3.6 percent. Exporters with heavy U.S. dollar revenue, including Toyota Motor and Sony Group, also slid as the stronger yen weighed on translated earnings. Defense contractors bucked the trend, with Mitsubishi Heavy Industries rising 2.8 percent and Korea Aerospace Industries climbing 3.4 percent in Seoul.

In a note to clients distributed early Monday in Hong Kong, Goldman Sachs Asia equity strategist Eleanor Park-Whitfield wrote that the firm was lowering its three-month price target for the MSCI Asia ex-Japan index by 6 percent and raising its Brent forecast to a range of $120 to $135 a barrel. “The market is no longer pricing a short, contained conflict,” Park-Whitfield wrote. “Positioning data suggests institutional investors have begun treating the Iran war as a structural rather than transient shock, and that recalibration has further to run.”

The Asian selloff foreshadowed a difficult Monday open on Wall Street, where the S&P 500 has already fallen 4.3 percent since the war began in late February. U.S. equity futures were sharply lower in overnight electronic trading, with S&P 500 e-minis down 1.4 percent and Nasdaq 100 futures off 1.8 percent. Yields on the 10-year U.S. Treasury note fell six basis points to 3.92 percent as investors reached for duration.

Adding to anxieties, regional economies are already absorbing real disruption from the conflict. Egyptian authorities last week mandated 9 p.m. business closures to conserve fuel; tea shipments bound for Pakistan and the Gulf remain stranded at the Kenyan port of Mombasa; and food-security analysts have warned that prolonged disruption to Red Sea and Hormuz shipping could push staple grain prices higher across South and Southeast Asia.

Diplomatic efforts continued in parallel. Turkish officials confirmed Sunday that talks in Islamabad, with Pakistan, Saudi Arabia and Egypt acting as mediators, were ongoing, though no participant has publicly described meaningful progress. Traders said the absence of a concrete de-escalation framework was the principal driver of Monday’s selling.

“Until there is a credible diplomatic off-ramp, every weekend is a tail-risk event for Asian markets,” Menon said. “Sunday futures sessions have become the most important price-discovery window of the week.”