Asian markets showed a patchwork of moves on Tuesday as participants digested fresh signals linked to the U.S.-Israel war on Iran and the potential for prolonged disruption to regional energy flows. The geopolitical shock has been a dominant headwind for markets across the region, leaving many bourses well below their February levels by the end of March.
Among major Asian indices, Japan's Nikkei 225 and South Korea's KOSPI were the weakest performers over the month, suffering steep declines that were magnified by sell-offs in large technology and semiconductor stocks.
Market participants also tracked overnight activity on Wall Street, where S&P 500 futures climbed by more than 1% by 23:11 ET (03:11 GMT) after reports said U.S. President Donald Trump was considering ending the Iran war without ordering an operation to re-open the Strait of Hormuz. Asian trading took only limited comfort from the report, given that any extended closure of the Strait would continue to threaten oil and gas supplies to the region.
South Korea - March pain led by chips
South Korea's KOSPI fell 2.2% on Tuesday and stood out as the worst-performing Asian market for March, with an overall decline of roughly 17% during the month. The broader rout across the region was driven in part by elevated investor concern over the potential for energy supply disruptions tied to the Iran conflict.
Within the KOSPI, losses were intensified by deep selling in local chipmakers, notably Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660). Those names faced mounting investor questions about the sustainability of long-term chip demand from the artificial intelligence sector, and heavy profit-taking hit wider sectors after a strong run in the first two months of 2026. Despite March's losses, the KOSPI remained up nearly 21% for the year to date.
China and Hong Kong - PMI gains do not stem declines
Mainland Chinese benchmarks also eased on Tuesday, with the Shanghai Shenzhen CSI 300 down 0.6% and the Shanghai Composite off 0.4%. Hong Kong's Hang Seng slipped 0.4% as well. The falls came even though official purchasing managers index data for March showed stronger-than-expected manufacturing expansion and an unexpected pickup in non-manufacturing activity.
The PMI readings signaled some improvement in business activity in China's economy, supported by robust export demand and policy support from Beijing. Nevertheless, mainland indexes were on track to end March down between 6% and 7%, even as China is considered relatively better placed to handle energy supply shocks from the Iran conflict.
Regional landscape - broad March losses
Across Asia, markets were positioned for steep monthly losses as investors fretted over the continuing fallout from the Iran war and the risk of disruptions in the Strait of Hormuz. Several economies in the region are especially sensitive to interruptions of oil and gas shipments transiting that channel.
After South Korea, Japanese equities were among the weakest in March. The Nikkei 225 was set to lose over 9% for the month, while the broader TOPIX fell nearly 10% in March. Japanese markets were further unsettled by lingering concerns over potential additional interest rate hikes from the Bank of Japan.
India's Nifty 50 also suffered, nursing an over 9% decline in March amid worries about sensitivity to oil import disruptions. Australia's ASX 200 traded down about 7% for the month following an interest rate increase from the Reserve Bank of Australia. By contrast, Singapore's Straits Times index was among the relative outperformers, recording only about a 1.6% drop in March.
Takeaway
Market moves in Asia over the month were dominated by geopolitical risk and sector-specific pressure in technology and energy-sensitive economies. Even with intermittent rallies in U.S. futures linked to potential de-escalation steps, the underlying concerns about supply disruptions and demand for high-growth tech products continued to shape regional performance.
Key sectors affected:
- Semiconductors and technology - sharp selling in major chipmakers, weighing on indices such as the KOSPI.
- Energy - heightened sensitivity to oil and gas supply disruptions through the Strait of Hormuz impacting energy-importing economies.
- Financial markets - broader equity indices reacting to geopolitical developments and central bank rate considerations, notably in Japan and Australia.