Japanese stocks dropped on news of Israel’s military strike on Iran, pushing the benchmark Nikkei 225 down by 1.25 per cent during the first hour of trading in Tokyo.

South Korea’s Kospi index fell more than 1 per cent in the early part of its morning session.

US equity index futures fell and US bonds gained as yield on the benchmark 10-year Treasury dipped four basis points to 4.32.

In Tokyo, basic materials, textiles and other stocks exposed to potentially surging oil prices sold heavily, while shares in Japan’s largest energy companies — Inpex, Eneos and Idemitsu — rose sharply.

The yen, which had been trending higher against the US dollar ahead of the news, sank by 0.35 per cent to ¥143 before rebounding again as traders braced for potentially severe volatility.

News of the strikes emerged before Hong Kong trading had begun.