Asian equities fell Monday as continued hostilities in the Middle East stoke fears that a drawn-out war could cause an inflationary shock and force central banks worldwide to raise interest rates, The Wall Street Journal reports.

Japan's Nikkei Stock Average dropped 4.1%, South Korea's Kospi shed 5.5%, and Singapore's FTSE Straits Times Index lost 1.9%.

Markets are increasingly worried that lasting disruption in the Strait of Hormuz, a key shipping lane for the world's oil and gas supplies, could spill over to other commodities, affecting industries from agriculture to aviation.

Investors also fled risk assets, driving volatility higher and pressuring export-driven sectors. Analysts warn prolonged instability could further tighten energy markets, amplify cost pressures, and weigh on global growth expectations in the coming months.