Asian equity futures signaled declines in Sydney, Tokyo, and Hong Kong as renewed Middle East tensions lifted oil prices, reviving inflation concerns and the prospect of further monetary tightening. US crude extended gains in early Asia trading after escalations drove it near $86 on Monday.

Rising energy costs pushed Treasury 10-year yields to the highest since January 2025. The S&P 500 futures were steady after the benchmark trimmed its August advance. The geopolitical flare-up between the US and Iran has injected fresh uncertainty into markets already navigating a delicate disinflation path.

Higher oil prices threaten to accelerate consumer price pressures, potentially forcing central banks to maintain or raise interest rates. Investors are reassessing risk exposure across equities and fixed income as the situation develops.