Asian stock markets extended their losses on Monday as fears over the escalating Middle East conflict rattled investors already grappling with inflation concerns and slowing economic growth. Japan's Nikkei 225 tumbled more than 2% in early trading, while Hong Kong's Hang Seng index dropped over 3% as geopolitical tensions overshadowed hopes for economic stimulus.

The selloff comes amid heightened anxiety over potential disruptions to global oil supplies, with crude prices surging to their highest levels in months. Traders rushed to safe-haven assets, driving U.S. Treasury yields lower and pushing the dollar higher against most major currencies. The market volatility reflects growing unease about the economic fallout from the conflict, particularly for energy-dependent economies in Asia.

Investors are now bracing for further turbulence as the situation in the Middle East remains fluid. With central banks already struggling to tame inflation without tipping economies into recession, the latest geopolitical shock adds another layer of uncertainty to an already fragile global outlook.