Asia markets choppy as threat of Trump Hormuz levy spooks traders

Markets were also rattled by hawkish comments on Monday from Federal Reserve Governor Christopher Waller, who said the U.S. central bank may need to raise interest rates "in the near term" if coming data show inflation continuing well above the 2% target.

"While the risk had been building in the system over the past week, markets reacted aggressively" to the latest headlines from the Iran conflict, said Chris Weston, head of research at Pepperstone Group Ltd in Melbourne.

"The prospect of tighter monetary policy into a potential energy shock is rarely supportive for risk assets."

Overnight, stocks on Wall Street sold off and oil futures surged more than 9% as conflict between the United States and Iran re-ignited, once again throttling the flow of goods through the Strait of Hormuz. The S&P 500 .SPX closed 0.8% lower and the Nasdaq Composite .IXIC fell 1.6%.