ASX 200 Dips as US Strikes on Iranian Rocket Launchers Rattle Markets Across the Asia Pacific Region

SYDNEY — Australia's benchmark S&P/ASX 200 index slipped Monday, giving back some of Friday's gains as fresh U.S. military action against Iranian targets in the Strait of Hormuz rattled equity markets across the Asia-Pacific region to open the final trading week of August.

The ASX 200 was trading around 9,077.6 points, down roughly 0.16%, according to index data. The index had opened the session down about 0.2% to 9,076 points, having briefly recovered to a gain of 0.1% before slipping again as the trading day progressed, according to live coverage from ABC News. The pullback followed a stronger finish to last week, when the index rose 0.6% Friday to close at 9,092.3 points.

The renewed weakness traces back to developments overnight in the Middle East. U.S. forces struck two Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday, according to CNBC, an action that reignited fears of further escalation in the region's monthslong conflict and weighed on risk sentiment heading into the new trading week. U.S. stock futures fell in response, with Dow Jones Industrial Average futures down about 0.29%, S&P 500 futures off 0.36% and Nasdaq-100 futures down roughly 0.4%.

The impact rippled across regional markets in Asia. South Korea's Kospi index pared early losses to finish down about 0.52%, Japan's Nikkei 225 fell 0.57%, Hong Kong's Hang Seng Index dropped 0.71%, and mainland China's CSI 300 slid 0.81%. Australia's ASX 200 was among the more modest decliners in the region, trading roughly 0.26% to 0.27% lower for much of the session, according to CNBC's market coverage.

Sector performance within the Australian market was mixed. Materials stocks were the day's worst performers, down about 1.9%, weighed down by declines in major miners BHP, which fell roughly 1.1%, and Rio Tinto, down about 0.7%. Banking stocks provided a partial offset, with shares of Westpac, Commonwealth Bank, ANZ and National Australia Bank climbing between roughly 1.5% and 2.1% during the session, helping to limit the broader index's losses, according to ABC News's live markets coverage.

Monday's session also brought a notable shift in interest rate expectations. Morgan Stanley said in a research note that it now expects the Reserve Bank of Australia to raise its official cash rate at its next meeting on Sept. 29, forecasting a 25-basis-point increase to 4.6%. The investment bank's Australian strategy team pointed to stronger-than-expected July inflation data as the catalyst for the revised call, writing that the latest inflation print "meets the threshold for the 'upside risks' to inflation the RBA flagged at its August meeting and said it would act against."

Corporate news added further pressure on individual stocks within the index. Star Entertainment reported a loss of 307 million dollars, a result that has raised fresh questions about the casino operator's ability to continue as a going concern, according to ABC News. Fertility services provider Monash IVF also weighed on sentiment after reporting a 41% drop in net profit to 16 million dollars, a result that came in below the company's own revised full-year earnings guidance, with management attributing part of the miss to a 1.4 million dollar write-off of prepaid assets.

Traders were also looking ahead to a busy week of economic data both domestically and in key trading partner China. Australia is scheduled to release second-quarter GDP figures and July trade data in the coming days, while China's official and private-sector manufacturing surveys for July are also due, both of which are likely to influence sentiment across Asia-Pacific markets heading into September.

Despite Monday's pullback, the ASX 200 remains up roughly 1.39% for the month of August as a whole, according to data from Investing.com, having traded in a range between 8,940.40 and 9,296.70 points over the period. The index's performance this week will likely hinge on how the situation in the Strait of Hormuz develops, alongside the incoming domestic and Chinese economic data and any further signals from the Reserve Bank of Australia regarding the timing of its next policy move.