Asia stocks fall as US-Iran jitters persist; S.Korea leads losses

Most Asian stocks fell further on Tuesday as hostilities between the U.S., Israel, and Iran showed few signs of stopping, with South Korean markets leading losses in catch-up trade after a long weekend.

Losses in Chinese markets were relatively muted as investors waited for 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 surging on gains in oil prices.

Regional markets took middling cues from a volatile overnight session on Wall Street, as risk appetite remaining largely frail. S&P 500 Futures fell 0.6% by 21:31 ET (02:31 GMT), as comments from US, Israeli, and Iranian officials showed few signs of de-escalation.

A surge in oil prices and interruptions 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, falling 4.3% after a long weekend.

Local stocks were also hit with a wave of profit-taking following 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 indices 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 resistance in growth. But separate data showed Japan’s unemployment rate unexpectedly grew in January.

Some hawkish-leaning remarks from the Bank of Japan also weighed in, 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 Hanging Seng.

Videogame developer NetEase Inc (NASDAQ:NTES) rose 3.3% after Morgan Stanley reaffirmed its Overweight rating on the stock, stating that the company’s potential inclusion in a Mainland China trading program presented strong potential.

Singapore’s Straits Times index was an outlier, rising 0.9% on gains in local energy stocks, while futures for India’s Nifty 50 index fell 0.6%, after the index slipped 1.2% on Monday.

Australia’s ASX 200 drops with GDP data in focus

Australia’s ASX 200 index fell 1.3% on Tuesday, with focus clearly on upcoming gross domestic product data for the fourth quarter, due on Wednesday.

Data released on Tuesday pointed to a potentially weak print on Wednesday, especially as the country logged a much greater than expected current account deficit in the fourth quarter.

GDP contribution from exports also fell 0.1% in Q4, pointing to little economic support from the nation’s massive mining sector.

Australian markets were also spooked by Reserve Bank of Australia Governor Michele Bullock suggesting that it might raise interest rates again in March.

Bullock warned of the inflationary shocks from a prolonged Middle Eastern conflict, and said that the RBA’s March meeting would consider all possibilities.

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Asian stocks plunged on Tuesday as investors responded to the ongoing tensions in Iran and its potential impact of regional energy supplies. In Hong Kong, HSI was down 74 points or 0.29% to 25,985. South Korea’s Kospi index also opened sharply lower after Monday’s holiday, plunging 4.88% to 5,939.
Shanghai and Shenzhen also fell 0.07% and 1.05% respectively. Japan’s Nikkei 225 declined 2.4% or 1,427 points, landing at 56,629 by 10:10 am.
Analysts noted that Japan, which relies heavily on oil and natural gas shipments through the Strait of Hormuz, could face supply challenges. However, the country’s stockpile of over 200 days of energy means the immediate threat remains limited.

SINGAPORE

March 3 (Reuters) – A selloff in stocks deepened on Tuesday and the dollar strengthened as investors considered the implications of U.S. sanctions. and Israeli strikes on Iran on energy prices and the global economy.
MSCI’s widest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab fell 1.5% to extend losses for a second day, led by a drop of as much as 4.1% in Korean shares (.KS11), opens new tab. Tokyo’s Nikkei 225 (.N225), opens new tab slumped 2.3% and S&P 500 e-mini futures were down 0.6%.

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