Asian Markets Plunge Amidst Iran Conflict and Energy Market Fears

Asian equity markets experienced significant declines on Monday, March 9, 2026, driven by investor anxiety over the recent large-scale U.S. Strikes on Iran and the potential for a prolonged conflict in the Persian Gulf. Concerns over a sharp shock to energy markets are also contributing to the downturn.

Market Performance Across Asia

Major market indices across Asia posted substantial losses. Japan’s Nikkei 225 fell by approximately 5.2% on Monday, even as South Korea’s KOSPI sank by 6.2%. Vietnam’s VN-Index experienced a decline of around 5.7%. Other Asian markets also saw drops, though less pronounced: Hong Kong’s Hang Seng Index fell by roughly 1.8%, and India’s NIFTY 50 was down by 2.5% in morning trading.

Cumulative Market Declines

Monday’s declines add to a steep slide in Asian markets since the commencement of the Iran war. The KOSPI has fallen by over 16% since the conflict began. Japan’s Nikkei 225 and Australia’s ASX 200 have decreased by approximately 10% and 6%, respectively, over the same period.

Impact of Strait of Hormuz Closure

Many Asian economies heavily rely on oil imports from the Gulf region, which have been disrupted by Iran’s closure of the Strait of Hormuz last week. South Korea sources about 70% of its crude oil from the Middle East, while Japan relies on the region for approximately 90% of its crude oil supply. The price of West Texas Intermediate (WTI) crude briefly exceeded $115 a barrel on Monday morning.

Tech Sector Reversal

The energy shock has reversed a recent rally in Asia’s AI-linked, tech-heavy growth stocks. South Korean chipmakers Samsung Electronics and SK Hynix, which had surged due to increased demand for memory chips, have both dropped by around 20% since the U.S. Strikes began.

China’s Relative Stability

China has demonstrated less volatility compared to its neighbors, attributed to its long-term energy planning and substantial oil stockpiles. The CSI 300 index, tracking stocks in Shanghai and Shenzhen, is down by only 2.3% since the war began. According to a report by BNP Paribas analyst William Bratton on March 9, China could potentially benefit from a rotation of investments out of Northeast Asian markets if the Middle East situation persists.

U.S. Market Response

The U.S. Stock market has 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 helped to mitigate 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.

Analyst Outlook

Despite the short-term sell-off, Goldman Sachs analysts have encouraged investors to view the KOSPI’s decline in the context of its exceptional 176% increase since April 2025, suggesting it is a correction likely to be followed by a recovery. Eli Lee, chief investment strategist at OCBC-owned Bank of Singapore, anticipates a “knee-jerk risk-off market reaction” but believes that, barring a significant oil shock, geopolitical events typically do not have a prolonged negative impact on equity prices.