Asian Markets React to US-Israel Strikes on Iran

Asian stock markets experienced volatility on Monday, March 2, 2026, following the weekend’s joint military strikes by the United States and Israel on Iran. While initial declines were sharp, some markets recovered, avoiding a widespread “panic market” scenario. The attacks have raised concerns about potential disruptions to oil supply and broader regional instability, impacting investor sentiment.

Market Performance Across Asia

China

China’s Shanghai Composite Index opened lower but narrowed its decline, closing at 4,182.59, up 0.47% from the previous trading day. Gains were driven by energy and raw material stocks, anticipating higher international oil prices. China Petrochemical rose by 10.06% and PetroChina increased by 10.04%. The Shenzhen Component Index closed down 0.20% at 14,465.79, while the ChiNext index, focused on IT and technology, rose 0.21% to 3,317.33.

Hong Kong

Hong Kong’s Hang Seng Index experienced a more significant decline, closing at 26,059.85, down 2.12% from its previous close. The index saw intraday declines exceeding 1%.

Japan

Japan’s Nikkei 225 Stock Average closed at 58,057.24, down 1.35% . The index had fallen as much as 2.7% to 57,285 earlier in the day but recovered some ground. The Nippon Keizai Shimbun attributed the market’s risk aversion to the U.S. And Israeli attack on Iran and the subsequent surge in crude oil prices, alongside existing anxieties surrounding finance and artificial intelligence.

Other Asian Markets

The Singapore stock market’s Straits Times (ST) index fell 2.16%. Indonesia’s Jakarta stock market’s IDX index declined by 2.43%, and Malaysia’s KLSE index fell by 1.08%.

Currency Fluctuations

In Tokyo, the yen-dollar exchange rate rose to the 157 yen level due to a weakening yen, as investors purchased dollars as a precaution. In the Shanghai foreign exchange market, the yuan’s exchange rate rose slightly with the strengthening dollar, reaching 6.90 yuan per dollar during the day. China’s People’s Bank of China set the standard exchange rate for the yuan at 6.9236 yuan per dollar.

Oil Prices and Global Impact

The attacks on Iran have significantly impacted global energy prices. The price of a barrel of U.S. Benchmark crude rose more than 8% to $72.70, a price not seen since the U.S. Summer driving season. Brent crude jumped 9% to nearly $79.19 per barrel. This spike could translate to higher gasoline prices for consumers in the coming weeks. Travel sectors, including airlines, cruise operators, and hotel chains, have also experienced declines.

Looking Ahead

The situation remains fluid, and market reactions will likely continue to evolve based on further developments in the Middle East. Investors are closely monitoring geopolitical risks and their potential impact on the global economy. The disruption to oil supply, particularly through the Strait of Hormuz, remains a key concern.