Israel strikes Iran, oil jumps

Asia-Pacific markets fell Friday as Israel conducted a military strike on Iran, targeting its nuclear program, while Iran vowed to retaliate.

Japan’s benchmark Nikkei 225 pared earlier losses to end the day 0.89% lower at 37,834.25 while the Topix fell 0.95% to 2,756.47.

South Korea’s Kospi dropped 0.87% to close at 2,894.62 while the small-cap Kosdaq declined 2.61% to 768.86.

Australia’s S&P/ASX 200 ended the day 0.21% lower at 8,547.40.

Hong Kong’s Hang Seng index fell 0.59% to 23,892.56 while mainland China’s CSI 300 ended the day 0.72% lower at 3,864.18.

India’s Nifty 50 lost 0.64%, while the BSE Sensex was down 0.79% as of 1.45 p.m. Indian Standard time.

Israel launched a series of airstrikes against Iran early Friday morning local time, targeting locations it said were related to Iran’s nuclear program.

Israel’s Defense Minister Israel Katz said, “Following the State of Israel’s preemptive strike against Iran, a missile and drone attack against the State of Israel and its civilian population is expected in the immediate future.

Oil prices jumped as much as 13% during the day in Asia. Global benchmark Brent futures were up 6.16% at $73.52 per barrel as of 4.10 pm Singapore time, while the U.S. West Texas Intermediate rose 6.39% at $72.38 per barrel.

“The market has largely been shrugging off geopolitical risk for the last year, and these development have been a wakeup call that these risks are more tangible and imminent than many expect,” Saul Kavonic, head of energy research at MST Marquee told CNBC via email.

“It is possible these attacks could be calibrated to add pressure on U.S. Iran negotiations and the situation subsequently de-escalate,” he said.

U.S. stock futures slid during Asian hours as tensions in the Middle East worsened.

U.S. producer prices in May rose just 0.1% from the previous month, coming in cooler than the 0.2% jump expected by economists surveyed by Dow Jones. The softer reading helped boost major stock indexes, while bond yields declined, improving investor sentiment. This followed a cooler-than-expected consumer inflation report earlier in the week.

Overnight stateside, all three key benchmarks closed higher. The S&P 500 rose, helped by a rally in Oracle that lifted the big tech sector. The benchmark climbed 0.38% to close at 6,045.26. The broad market S&P 500 now sits less than 2% off its record high. The Nasdaq Composite gained 0.24% and ended the day at 19,662.48. The Dow Jones Industrial Average added 101.85 points, or 0.24%, settling at 42,967.62.

— CNBC’s Riya Bhattacharjee, Lisa Kailai Han, Pia Singh, Sean Conlon contributed to this report.