Asian equity markets suffered significant declines on Monday as investors reacted to escalating tensions following U.S. President Donald Trump’s order for large-scale strikes on Iran last week. Concerns over a protracted conflict in the Persian Gulf and a potential shock to global energy markets fueled the sell-off.
Japan’s Nikkei 225 closed down 5.2%, while South Korea’s KOSPI experienced a steeper drop of 6.2%. Vietnam’s VN-Index fell by 5.7%. Hong Kong’s Hang Seng Index and India’s NIFTY 50 saw more moderate declines, falling by 1.8% and 2.5% respectively.
The KOSPI has now fallen by over 16% since the commencement of U.S. Strikes on Iran, while the Nikkei 225 and Australia’s ASX 200 have declined by approximately 10% and 6% over the same period. The downturn reflects the economic vulnerability of Asian nations heavily reliant on Middle Eastern oil supplies.
The disruption to oil flows, exacerbated by Iran’s closure of the Strait of Hormuz last week, has sent crude prices soaring. West Texas Intermediate (WTI) crude briefly surpassed $115 a barrel on Monday morning. South Korea, which sources around 70% of its crude oil from the Middle East, and Japan, which relies on approximately 90% of its oil imports from the region, are particularly exposed to the supply shock.
The energy market volatility has also reversed a recent rally in Asia’s technology stocks. South Korean chipmakers Samsung Electronics and SK Hynix, which had benefited from strong demand for memory chips, have both experienced declines of around 20% since the U.S. Strikes began. Prior to the conflict, the combined valuation of the two companies had briefly exceeded that of Alibaba and Tencent.
China has demonstrated relative resilience compared to its neighbors, with the CSI 300 index, tracking stocks in Shanghai and Shenzhen, down by only 2.3% since the start of the conflict. Analysts at BNP Paribas attribute this to China’s long-term energy planning and substantial oil stockpiles. William Bratton, a BNP Paribas analyst, noted in a March 9 report that “If the current Middle East situation continues to persist, China could even be a potential beneficiary of rotation out of Northeast Asian markets.”
The U.S. Stock market has also remained relatively stable, with the S&P 500 falling by just 2.0% over the past week. The U.S.’s position as a major oil producer has provided some insulation from the impact of reduced Middle Eastern oil supplies. However, S&P 500 futures were down by around 1.5% as of 2:00am Eastern time on Monday, suggesting growing investor concern.
Despite the immediate market reaction, some analysts remain optimistic about a long-term recovery. Goldman Sachs analysts have suggested that the KOSPI’s decline should be viewed in the context of a 176% increase since April 2025, characterizing the current pullback as a correction likely to be followed by a period of consolidation and renewed growth.
Eli Lee, chief investment strategist at OCBC-owned Bank of Singapore, echoed this sentiment, stating that geopolitical events typically do not have a prolonged negative impact on equity prices, “barring an oil shock.”
President Trump said on Tuesday he had ordered the United States Development Finance Corporation to provide political risk insurance and guarantees for maritime trade traveling through the Persian Gulf, stating the insurance “will be available to all Shipping Lines.” He also indicated the potential for the U.S. Navy to escort tankers through the Strait of Hormuz, asserting the U.S. Commitment to ensuring the “FREE FLOW of ENERGY to the WORLD.”
