Asian markets drop as Middle East conflict worries grow

HONG KONG, China— Asian markets sank Monday on concerns that Israel's expected ground offensive against Hamas in Gaza could spark a regional war involving Iran, with warnings that oil prices could surge, further complicating central banks' efforts to tame inflation.

After a week-long bombing campaign, Israel has amassed a huge army on the border with Gaza for what is expected to be a ground incursion aimed at flushing out militants after surprise attacks on October 7 that left hundreds dead.

Tel Aviv has ordered more than a million Palestinians to evacuate the north of the territory, fuelling worries about a humanitarian crisis.

While President Joe Biden has said Israel had the right to defend itself, he told CBS news program 60 Minutes that any move to occupy the Gaza Strip again would be a "big mistake".

However, reports said he was considering a trip to Israel after being invited during a call with Israeli Prime Minister Benjamin Netanyahu, while Secretary of State Antony Blinken is set to return Monday for his second visit since the Hamas attacks.

The possible meeting comes amid fears that the local conflict will turn regional if Iran -- which has been accused of helping stage this month's attack -- becomes involved.

"The key uncertainty is whether a ground operation risks widening the conflict, with markets focused on whether Iran and its allies are drawn into the conflict," said National Australia Bank's Tapas Strickland. 

Meanwhile, JPMorgan Chase & Co boss Jamie Dimon warned Friday of the geopolitical crisis if the fighting widened.

"This may be the most dangerous time the world has seen in decades," he said in the bank's third-quarter earnings statement.

"The war in Ukraine compounded by last week's attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships."

The uncertainty weighed on Wall Street stocks, with the Nasdaq and S&P 500 both dropping, while oil prices soared almost six percent.

However, the Dow ended slightly higher thanks to strong earnings from JPMorgan, Citi and Wells Fargo that came on the back of elevated interest rates.

Asia was in the red, with Tokyo off two percent, while