Stocks resumed their selloff and the dollar strengthened in early Asian trading on Tuesday as investors considered the implications of US and Israeli strikes on ⁠Iran on energy prices and the global economy.

In Hong Kong, the benchmark Hang Seng Index opened up 130 points, or 0.5 percent, at 26,190 before losing steam soon after to slip into the red.

The China enterprises index was down 30 points, or 0.35 percent, at 8,671 while the tech index was 37 points, or 0.76 percent, down at 4,951.

On the mainland, the benchmark Shanghai Composite Index was up almost seven points, or 0.16 percent, at 4,189.

The Shenzhen Component Index was almost 33 points, 0.23 percent, higher at 14,498 while the ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, was up 0.68 percent at 3,316.

In Tokyo, the 225-issue Nikkei Stock Average opened down 327 points, or 0.56 percent, at 57,729. By mid-morning, the retreat gathered pace and the benchmark was 1,294 points, or 2.23 percent, down at 56,762.

MSCI's broadest index of Asia-Pacific shares outside Japan fell one percent to extend losses for a second day, led by a 2.5 percent tumble in Korean shares. S&P 500 e-mini futures were down 0.2 percent.

"Economic policy uncertainty was already elevated and now with the Iran conflict, the geopolitical risk is expected to rise too," said Rupal Agarwal, Asia quantitative analysis strategist at Bernstein in Singapore. "Last time both spiked was in 2022 during the Russia-Ukraine conflict, which didn’t work well for Asian markets."

The surge in energy prices complicates the Federal Reserve's efforts to keep inflation under control, with policymakers already showing signs of division around the impact of artificial intelligence on the US economy.

ISM manufacturing data released on Monday showed activity grew steadily in February, but a gauge of prices at the factory gate raced to a near three-and-a-half-year high amid tariffs, highlighting upside risks to inflation even before the US-led attack on Iran sent oil prices rocketing. (Reuters & Xinhua)

Edited by Aaron Tam