Stock market today: Asian stocks track Wall Street's decline as Middle East tensions escalate

HONG KONG (AP) — Asia stocks pulled back on Monday as worries about potentially escalating tensions in the Middle East rattled financial markets, pushing investors to look for safer places for their money.

U.S. futures rose and oil prices fell despite tensions roiling the Middle East where an attack late Saturday marked the first time Iran had ever launched a military assault on Israel, despite decades of enmity dating back to the country’s 1979 Islamic Revolution.

A barrel of benchmark U.S. oil declined 41 cents to $85.25 a barrel. Brent crude, the international standard, lost 24 cents to $90.21. Slower demand from China, combined with forecasts that growth in supply is outpacing demand, has kept prices in check.

“While the drone attack has grabbed headlines, its immediate impact on global markets, particularly oil prices and inflation concerns, may be subdued,” Stephen Innes, managing partner at SPI Asset Management, said in a commentary. “The precision and limited lethal impact of Iran’s response suggest a strategic approach aimed at minimizing damage rather than escalating tensions.”

Japan’s benchmark Nikkei 225 slipped 1% in morning trading to 39,114.19.

In currency trading, the U.S. dollar rose to 153.71 Japanese yen from 153.07 yen, hitting another 34-year high as investors shifted toward the traditional currency of refuge. The euro cost $1.0650, up from $1.0635.

Australia’s S&P/ASX 200 dipped 0.6% to 7,743.80. South Korea’s Kospi dropped 1.1% to 2,653.06.

Hong Kong’s Hang Seng dropped 0.5% to 16,633.37, while the Shanghai Composite gained 1.4% to 3,062.73. Elsewhere in Asia, Taiwan’s Taiex was 1% lower and the Sensex in India fell 1% as the country geared up for lengthy national election process.

The retreat Monday followed a decline Friday on Wall Street following a mixed start to the earnings reporting season.

The S&P 500 sank 1.5% on Friday to 5,123.41, closing out its worst week since October, when a huge rally on Wall Street began. The Dow Jones Industrial Average dropped 1.2% to 37,983.24, and the Nasdaq composite fell 1.6% from its record set the day before to 16,175.09.

JPMorgan Chase was one of the heaviest weights on the market and sank 6.5% despite reporting stronger profit for the first three months of the year than analysts expected. The nation’s largest bank gave a forecast for a key source of income this year that fell below Wall Street’s estimate, calling for only modest growth.

The pressure is always on companies to produce fatter profits. But it’s particularly acute now given worries that the other main lever that sets stock prices, interest rates, may not offer much lift in the near term.

A stream of reports this year has shown both inflation and the overall economy remain hotter than expected. That's forced traders to scale back forecasts for how many times the Federal Reserve may cut its main interest rate this year. Traders are largely betting on just two cuts, according to data from CME Group, down from forecasts for at least six at the start of the year.

U.S. stock indexes had already run to records in part on expectations for such cuts. Without easier interest rates, companies will need to produce bigger profits to justify their stock prices, which critics say look too expensive by various measures.

At the same time, Treasury yields in the bond market sank and the price of gold rose, which is typical when investors are herding into investments seen as safer.

The yield on the 10-year Treasury fell to 4.51% from 4.58% late Thursday.

Adding to the nervousness was a preliminary report suggesting sentiment among U.S. consumers is sinking. It's an important update because spending by U.S. consumers is the main engine of the economy.

Perhaps more worrisome was that U.S. consumers may be getting more pessimistic about inflation. Their forecasts for inflation in the coming 12 months hit the highest level since December. Such expectations could ignite a self-fulfilling prophecy, where purchases meant to get ahead of higher prices only inflame inflation.