Asian markets mixed amid geopolitical tensions and rising oil prices

Asian stock markets ended the session with a mixed performance, reflecting a global environment dominated by geopolitical uncertainty, तनाव in energy markets, and expectations surrounding upcoming central bank decisions. While the technology sector continues to provide positive momentum, supported by the rebound in artificial intelligence-related stocks, concerns over the conflict in the Middle East and the resulting surge in oil prices are dampening investors’ risk appetite. Overall, the trading day highlights a fragile balance between supportive factors and downward pressures, with market participants remaining cautious ahead of developments on both the geopolitical and macroeconomic fronts.

Major Asian indices

Below are the closing levels of the region’s main indices:

1. Nikkei 225 (Tokyo): 53,700.39 points (-0.09%)
2. Hang Seng (Hong Kong): 25,868.54 points (+0.13%)
3. Shanghai Composite (China): 4,049.91 points (-0.85%)
4. Kospi (South Korea): 5,640.48 points (+1.6%)

Market performance shows a clear divergence: on one side, the relative strength of South Korea, supported by the technology sector; on the other, the weakness in China, which continues to be affected by domestic uncertainties and a less dynamic macroeconomic backdrop than expected.

Geopolitics takes center stage: Middle East in focus

Geopolitical developments remain the dominant driver of market sentiment, with the conflict involving the United States, Israel, and Iran continuing to fuel uncertainty. Tensions remain elevated, raising fears of a broader escalation that could directly impact key global energy routes. Particular attention is focused on the Strait of Hormuz, a strategic chokepoint through which around one-fifth of global oil supplies pass. Any disruption or threat to security in this area could have immediate repercussions on energy prices and, consequently, on global inflation.

The result is a generalized increase in risk aversion: investors are reducing exposure to more volatile assets while favoring instruments perceived as safer. This cautious stance is clearly reflected in the uneven performance of Asian equity markets.

Oil above $100: renewed inflationary pressures

The rise in oil prices is one of the key themes of the day. Brent crude remains above the $100 per barrel threshold, reigniting concerns about inflation at a time when many economies were hoping for a gradual easing of price pressures. Higher energy costs have direct implications on multiple fronts. On one hand, they weigh on corporate margins, particularly in energy-intensive sectors; on the other, they risk compressing consumption by reducing households’ purchasing power.

For Asian markets, which are heavily dependent on energy imports, the impact is even more significant. Countries such as South Korea and Japan are particularly exposed to potential energy price shocks, although in the short term the technology sector has helped offset part of these pressures.

Central banks and interest rates: uncertainty grows

On the macroeconomic front, investors remain focused on the next moves by central banks. The recent decision by the Reserve Bank of Australia to raise interest rates to 4.1% signals that the fight against inflation is not yet over. At the same time, markets are awaiting guidance from the Federal Reserve and the Bank of Japan, in a context where rising energy prices could further complicate the path toward a more accommodative monetary policy.

The main risk is that central banks may be forced to keep interest rates higher for longer than previously expected, with negative implications for economic growth and equity markets. This uncertainty continues to fuel volatility and limit any sustained recovery in stock indices.

The role of the technology sector

Despite the overall uncertain backdrop, the technology sector remains a key source of support for markets. The rebound seen on Wall Street, driven by artificial intelligence-related stocks, has had a positive spillover effect on Asian equities. In particular, South Korea’s Kospi has benefited from the strong performance of semiconductor producers, which remain at the forefront of the global technology cycle. Demand linked to AI and new digital applications continues to support the sector’s outlook.

However, several analysts urge caution, noting that this appears to be more of a technical rebound rather than the beginning of a structural upward trend. Without an improvement in the macroeconomic and geopolitical environment, the technology sector alone may not be sufficient to sustain broader market gains.

China under pressure

Among the major markets, China stands out for its negative performance. The Shanghai Composite closed lower, reflecting persistent concerns over the country’s economic growth. In recent months, China has shown mixed signals: while some indicators point to stabilization, doubts remain about the strength of domestic demand and the government’s ability to effectively support the recovery.

This weakness represents a risk factor for the entire Asian region, given China’s central role as an economic and trade engine. A sharper slowdown could have significant repercussions on exports, investment flows, and overall investor confidence.

A still fragile balance

The March 17, 2026 session confirms a complex and evolving landscape. Asian markets are currently balancing a series of often conflicting factors:

1. elevated geopolitical tensions
2. rising energy prices
3. uncertainty over monetary policy
4. mixed signals from the global economic cycle
5. selective support from the technology sector

In this environment, the short-term direction of markets appears highly dependent on geopolitical developments and upcoming central bank decisions.

Andrea Pelucchi