Asian stock markets are weak, with continued tension in the Middle East.

With concerns over the Israel-Hamas conflict dampening risk sentiment, most of Asia's stock markets experienced a decline on Monday, with Japan's Nikkei index leading the way due to tense sentiment ahead of key inflation data release.

As Israel prepares for a ground attack on the Gaza Strip, the market remains concerned that the Israel-Hamas conflict may spill over into the Middle East region. However, U.S. Secretary of State Antony Blinken stated that Arab countries do not want the conflict to spread.

Nevertheless, risk appetite remains weak, also under pressure from concerns about rising U.S. interest rates as last week's inflation data exceeded expectations.

Japan's Nikkei index performed the worst amidst profit-taking and significant declines in the technology sector.

Last week, the Bank of Japan's policy leaned towards easing, attracting a large number of foreign buyers due to the relatively strong performance of Japanese companies, pushing up the index.

However, deteriorating risk appetite led investors to lock in recent profits, with technology stocks experiencing the highest level of sell-off, as the market is still concerned about rising US interest rates.

Investors are also cautious about Japan ahead of crucial September inflation data to be released later this week. Signs of sustained inflation growth could potentially give the Bank of Japan more impetus to strengthen its policies.

The entire Asian market experienced a decline. South Korea's KOSPI index fell by 1%, while Australia's ASX 200 index dropped by 0.2%.

The Indonesia Nifty 50 index futures indicate a positive open, especially after last week's consumer inflation slowed down in September. Wholesale inflation data for India will be released later on Monday.

The Chinese stock market remained stable in terms of gross domestic product and interest rate decisions.

China's Shanghai Shenzhen 300 Index and Shanghai Composite Index fell by 0.6% and 0.4% respectively, while the Hang Seng Index in Hong Kong dropped by 0.1%.

Ahead of the release of the key third-quarter gross domestic product data, the market remains cautious about China, expecting the data to show continued economic weakness.

The People's Bank of China will also decide on its key loan prime rate later this week. Although the central bank has kept the medium-term lending rate unchanged, there may be some changes.

Despite the relaxation of anti-COVID measures, state media reported on Monday that the People's Bank of China still plans to introduce more interest rate cuts this year, as even though anti-COVID measures have been lifted, business activity data released in early October also painted a pessimistic outlook for Asia's largest economy.

Source: Investing.com