Most Asian stocks fell further on Tuesday as hostilities between the U.S., Israel, and Iran showed few signs of ceasing, with South Korean markets leading losses in catch-up trade after a long weekend.
Losses in Chinese markets were relatively muted as investors awaited more signals on stimulus from a series of upcoming economic policy meetings, while Hong Kong benefited from gains in energy and tech shares.
Airline and tourism stocks fell across Asia, while energy stocks surged on gains in oil prices.
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Regional markets took middling cues from a volatile overnight session on Wall Street, as risk appetite remained largely frail. S&P 500 Futures fell 0.6% by 21:31 ET (02:31 GMT), as comments from U.S., Israeli, and Iranian officials showed few signs of de-escalation.
A surge in oil prices and disruptions in global trade were the two biggest points of concern over the conflict, with the former standing to also drive up inflation.
KOSPI leads losses, Japan sinks as geopolitics bite South Korea’s KOSPI index was the worst performer in Asia, tumbling 4.3% after a long weekend.
Local stocks were also hit with a wave of profit-taking after a strong performance in February. Tech standouts SK Hynix Inc (KS:000660) and Samsung Electronics Co Ltd (KS:005930), and automaker Hyundai Motor (KS:005380)– which had all benefited from optimism over artificial intelligence– slid between 5% and 8% on Tuesday.
Japan’s Nikkei 225 and TOPIX indexes fell more than 2% each on Tuesday, with mixed domestic data also adding to uncertainty over the country.
Capital spending rose sharply in the fourth quarter, pointing to some resilience in growth. But separate data showed Japan’s unemployment rate unexpectedly grew in January.
Some hawkish-leaning comments from the Bank of Japan also weighed, after Deputy Governor Ryozo Himino said on Monday the central bank will likely keep raising interest rates.
Among broader Asian stocks, China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell relatively less than their peers– down about 0.2% apiece. Focus in China is squarely on the “two sessions” meetings scheduled between March 4 and March 11.
China’s top leadership is set to outline its 15th five-year plan for 2026-2030, and is expected to prioritize tech and industrial development.
Recent local media reports also suggested that Beijing will outline plans for more stimulus measures, amid laggard economic growth in the past five years.
Hong Kong’s Hang Seng index fell 0.2%, with gains in some energy and tech stocks helping limit overall declines. PetroChina (HK:0857), CNOOC Ltd (HK:0883), and ENN Energy Holdings Ltd (HK:2688) jumped between 1.9% and 4%, and were among the best performers on the Hang Seng.
Videogame developer NetEase Inc (NASDAQ:NTES) rose 3.3% after Morgan Stanley reiterated its Overweight rating on the stock, stating that the company’s potential inclusion in a Mainland China trading program presented strong potential.
