Key Asian markets, including the Indian stock market, closed lower on Monday, August 24, as investors remained cautious while awaiting further details on the US announcement of sweeping economic sanctions aimed at isolating Iran's economy and breaking the ongoing impasse between the two countries.
The cautious mood was further compounded by developments surrounding the annual gathering of top US economic officials at Jackson Hole, Wyoming. Investors are also awaiting a key inflation update on Wednesday, when the US releases its July personal consumption expenditures (PCE) report, which could offer fresh cues on the outlook for interest rates.
Reflecting the broader risk-off sentiment, major Asian indices ended the session in the red. In Tokyo, the Nikkei 225 closed 0.7% lower at 65,528.09, while South Korea's Kospi declined 3.1% to 6,696.96.
The weakness extended to other regional markets, with Hong Kong's Hang Seng falling 1.9% to 25,517.33, while the Shanghai Composite index slipped 0.6% to 3,882.01.
The U.S will unveil “the single greatest financial offensive ever” against Iran on Monday, Treasury Secretary Scott Bessent said. The measures will target Tehran and could also ensnare countries that continue to deal with the Islamic Republic, potentially including China.
Washington aims to increase economic pressure on Iran and push Tehran toward negotiations over the conflict, its nuclear programme and control of Hormuz.
In response to US economic threats, Iran once again said that fresh sanctions would not bring peace to the region. Iran's Foreign Ministry spokesperson on Monday warned that Tehran would respond harshly to expanded US sanctions, including measures against countries it sees as cooperating with Washington, according to AP.
Apart from geopolitical tensions, stocks were also pressured by rising bond yields across the globe. Long-dated US bond yields touched multi-decade highs last week, while yields in Japan, France, and Germany also climbed to multi-year highs.
Bond markets received only temporary relief after US Treasury Secretary Scott Bessent announced that the government would double its buybacks of longer-term bonds. The move was aimed at bringing down the 10-year Treasury yield and, in turn, lowering mortgage rates. However, the 10-year yield climbed back to 4.73% on Friday, matching its highest level in more than a year, before easing slightly to 4.71% early Monday.
Meanwhile, the 30-year Treasury yield, which is also being targeted through the government's bond repurchases, continued to rise and remained near its highest level since 2007.
Mahesh M Ojha, VP — Research & Business Development at KC Securities, said that the Nikkei is expected to face immediate resistance at 65,800, followed by 66,341 and 66,660, while support levels are placed at 65,470, 64,935, and 64,600. The overall trend remains neutral.
For the KOSPI, resistance levels are seen at 6,985, 7,080 and 7,200, while support is placed at 6,658, 6,573 and 6,400. The trend for the index is also assessed as neutral.
Meanwhile, the Hang Seng faces resistance at 25,980, 26,500 and 27,000, with support levels at 24,980, 24,728 and 24,500. The overall trend remains weak.
According to Ajit Mishra, SVP—Research at Religare Broking, the Nifty continues to consolidate around the 24,200 level after failing to sustain its recent rebound. The 24,000 zone remains an important near-term support, and a decisive break below this level could reopen the downside towards the 23,650–23,800 zone. On the upside, the 24,300–24,400 region is likely to act as the immediate hurdle.
Given the prevailing geopolitical uncertainty and elevated crude oil prices, Mishra recommends maintaining a cautious, stock-specific approach, with a preference for relatively stronger pockets such as metal, auto, and realty. He advises participants to utilise market declines selectively while maintaining disciplined risk and position management.
