Oil worries and the Iran war weigh on Asian stocks, with Korea’s KOSPI taking the biggest hit

Market indices fell on Monday. Japan’s Nikkei 225 fell about 5.2% on Monday, while South Korea’s KOSPI fell 6.2%. Vietnam’s VN index has fallen by around 5.7%. Other Asian markets fell by smaller amounts: Hong Kong’s Hang Seng index fell by around 1.8% and India’s NIFTY 50 index fell by 2.5% in morning trade.

Monday’s plunge adds to a sharp decline in Asian markets following Trump’s strike on Iran. The KOSPI has fallen more than 16 percent since the start of the Iran war. Japan’s Nikkei 225 and Australia’s ASX 200 have fallen by around 10% and 6%, respectively, over the same period.

Many Asian economies depend on Gulf oil exports, which have slowed since Iran closed the Strait of Hormuz last week. South Korea sources about 70% of its crude oil from the Middle East; In Japan, this figure is closer to 90 percent. The price of WTI crude oil briefly exceeded $115 per barrel on Monday morning.

The energy shock has reversed a rally in Asia’s AI-linked, technology-heavy growth stocks that had risen sharply in the weeks before the Gulf conflict. South Korean chipmakers Samsung Electronics and SK Both Hynix rose against the backdrop of soaring demand for memory chips. At one point, two companies together covered the combined value from Alibaba and Tencent.

Samsung and SK Hynix are now both down about 20 percent since the US strikes began.

China, on the other hand, has proven to be less volatile than its neighbors due to its long-term energy planning and huge oil reserves. The CSI 300 index, which tracks shares in Shanghai and Shenzhen, has fallen just 2.3% since the war began.

« If the current situation in the Middle East continues, China may even be a potential beneficiary of the diversion from the Northeast Asian market, » states. BNP Paribas analyst William Bratton in a March 9 report.

The US stock market has also remained relatively stable, with the S&P 500 down just 2.0% over the past week. The United States’ status as a major oil producer has helped cushion its economy from the impact of declining oil supplies from the Middle East.

Still, US investors can appreciate the full extent of the economic consequences of the Iran war. S&P 500 futures are down about 1.5% as of 2:00 a.m. ET.

Despite the short-term sell-off, Goldman Sachs analysts have urged investors to watch the KOSPI fall in the context of an extraordinary 176 percent rally since April 2025.

« We see the pullback as a correction, likely followed by a recovery to new highs after a period of consolidation, » the company’s analysts wrote in a March 6 report.

Other analysts agree that the market is likely to recover from the Iran strikes in the long term.

« We expected a knee-jerk de-risking reaction, » says Eli Lee, investment strategist at OCBC-owned Bank of Singapore. « But aside from an oil shock, history shows that geopolitical events typically do not negatively affect stock prices over the long term. »