Asia in the red as war fears hammer markets: Kospi -12%

Asian markets closed sharply lower on March 4, weighed down by escalating geopolitical tensions in the Middle East and a surge in energy prices. The intensifying conflict involving the United States, Israel and Iran, with potential repercussions for traffic through the Strait of Hormuz, triggered a wave of selling and a swift shift by investors toward defensive assets.

Leading the declines was the Kospi, which ended trading at 5,065.14 points, marking one of the worst performances in its recent history, with losses exceeding 12%. The Seoul market was particularly hit by the country’s energy vulnerability and the heavy weighting of export-driven technology giants, which suffered amid the broader risk-off sentiment.

The Nikkei 225 also posted steep losses, closing at 53,834.75 points (-4.3%). In Tokyo, declines were partially cushioned by a weaker yen, but concerns over structurally higher energy costs and renewed inflationary pressures outweighed recent optimism that had supported equities in previous weeks.

Heavy selling was also seen in Hong Kong, where the Hang Seng fell around 2–3%, hovering just above the 25,000 mark, while the Shanghai Composite limited losses yet still finished in negative territory at 4,063.57 points (-1.4%).

The spike in oil and gas prices has reignited fears of a resurgence in global inflation, complicating expectations for monetary easing by major central banks. Market sentiment quickly shifted into full risk-off mode: profit-taking in cyclical and technology stocks, heightened volatility, and increased demand for safe-haven assets.

The March 4 session thus leaves Asian markets facing a climate of heightened uncertainty: as long as geopolitical instability persists, the trajectory of regional equities is likely to be driven more by international developments than by domestic economic fundamentals.

Andrea Pelucchi