Asia closes in the red amid war, rising energy costs and interest rate uncertainty

Major Asian stock markets closed lower on March 13, pressured by rising geopolitical tensions in the Middle East and a sharp increase in oil prices, which have moved back above the $100 per barrel mark, fueling concerns about renewed global inflationary pressures.

In Tokyo, the Nikkei 225 ended the session at 53,819.61 points, down 1.16%, while in Hong Kong the Hang Seng Index closed at 25,465.60 points, slipping 0.98%. Mainland Chinese markets also finished lower, with the Shanghai Composite falling to 4,095.45 points (−0.82%). Losses were also recorded in Seoul, where the KOSPI dropped by more than 1.5%, dragged down in particular by technology stocks.

Market sentiment was mainly affected by the deterioration of the geopolitical environment, as investors focused on the escalation of tensions involving Iran, Israel, and the United States, raising fears of potential disruptions to global energy supplies. Concerns over possible restrictions to shipping through the Strait of Hormuz, a key route for global oil trade, have pushed crude prices higher.

The surge in energy prices risks reigniting inflationary pressures at a time when markets had been expecting a gradual easing of monetary policy by major central banks. The rally in oil prices has therefore tempered expectations for interest rate cuts in the coming months, weighing on risk assets.

Against this backdrop of uncertainty, the U.S. dollar has strengthened while investors increasingly move toward safe-haven assets, leaving several Asian currencies under pressure. Economies heavily dependent on energy imports, such as Japan and South Korea, remain particularly exposed to fluctuations in oil prices.

The combination of geopolitical tensions, higher energy costs and less accommodative monetary policy expectations is keeping volatility elevated across the region’s financial markets, with investors closely monitoring further international developments.

Andrea Pelucchi