Tensions between the US and Iran continue, Asian stock markets decline; South Korea leads the decline

Investing.com - On Tuesday, most Asian stock markets declined further, with little sign of easing in the hostilities between the U.S., Israel, and Iran. The Korean market led the decline in a post-long weekend correction.

Chinese markets saw relatively mild declines as investors await a series of upcoming economic policy meetings for more stimulus signals, while Hong Kong markets benefited from gains in energy and tech stocks.

Airlines and travel stocks across Asia fell, while energy stocks surged due to rising oil prices.

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Regional markets received mixed signals from overnight Wall Street volatility, with risk appetite remaining quite fragile. As of 21:31 Eastern Time (02:31 Beijing Time), S&P 500 futures were down 0.6%, with comments from U.S., Israeli, and Iranian officials indicating little sign of de-escalation.

Rising oil prices and disruptions to global trade are the two most concerning aspects of this conflict, with the former potentially fueling inflation.

KOSPI leads declines in Korea, Japan falls due to geopolitical concerns

The Korea KOSPI index was the worst performer among Asian stocks, plunging 4.3% after the long weekend.

Korean stocks, which had performed strongly in February, also experienced a profit-taking wave. Tech giants SK Hynix (KS:000660) and Samsung Electronics (KS:005930), along with automaker Hyundai Motor (KS:005380)—all beneficiaries of optimism around AI—fell between 5% and 8% on Tuesday.

Japan’s Nikkei 225 and Topix indices both declined over 2% on Tuesday, with mixed domestic data adding to the country’s uncertainty.

Capital expenditure surged in Q4, indicating some resilience in economic growth. However, another report showed Japan’s January unemployment rate unexpectedly rose.

Some hawkish comments from the Bank of Japan also added pressure, with Deputy Governor Ryozo Himino stating on Monday that the central bank might continue to raise interest rates.

In broader Asian markets, China’s CSI 300 and Shanghai Composite declined less than their peers—about 0.2%. Focus in China remains on the “Two Sessions” meetings scheduled from March 4 to March 11.

China’s top leadership will unveil the 15th Five-Year Plan for 2026-2030, expected to prioritize technology and industrial development.

Recent local media reports also suggest that Beijing plans to outline more stimulus measures after five years of sluggish economic growth.

Hong Kong’s Hang Seng Index fell 0.2%, with gains in some energy and tech stocks helping to limit the overall decline. China Petroleum (HK:0857), CNOOC (HK:0883), and Sinopec (HK:0386) rose between 1.9% and 4%, making them some of the best performers on the Hang Seng.

Video game developer NetEase (NASDAQ:NTES) rose 3.3% after Morgan Stanley reiterated its buy rating, citing strong potential for the company to be included in mainland China trading plans.

Singapore’s Straits Times Index was an exception, rising 0.9% on the back of gains in local energy stocks, while India’s Nifty 50 futures fell 0.6% after dropping 1.2% on Monday.

Australian ASX 200 declines, GDP data in focus

The Australian ASX 200 fell 1.3% on Tuesday, with attention fully on the upcoming release of Q4 GDP data on Wednesday.

Data released Tuesday suggest that Wednesday’s figures may be weak, especially as the country’s Q4 current account deficit significantly exceeded expectations.

Exports’ contribution to GDP in Q4 also declined by 0.1%, indicating limited support from the country’s large mining sector.

Reserve Bank of Australia Governor Philip Lowe hinted at the possibility of another rate hike in March, adding to market concerns.

Lowe warned that ongoing Middle East conflicts could bring inflation shocks and stated that the RBA’s March meeting will consider all options.

This article was translated with the assistance of artificial intelligence. For more information, see our Terms of Use.