Renewed geopolitical tensions in the Middle East, particularly between Iran and the U.S., are casting a shadow over Asia-Pacific markets, leading to lower openings. Concerns over elevated oil prices and their potential impact on inflation are keeping investors cautious.
Major indices across the region, including Japan’s Nikkei 225 and South Korea’s Kospi, saw declines, with significant drops also noted in Hong Kong and Australia. The uncertainty stems from recent military exchanges and statements from Israeli leadership indicating readiness for further action against Iran.
Middle East Tensions Ripple Through Asia-Pacific Markets, Investors on Edge
Asia-Pacific markets experienced a downturn on Thursday, mirroring overnight losses on Wall Street, as renewed tensions between Iran and the U.S. continued to keep oil prices elevated, fueling concerns over energy costs and inflation.
FUYANG, CHINA - MARCH 23, 2026 - Stock investors are following the stock market situation at a securities trading hall in Fuyang, Anhui, China on March 23, 2026. (Photo credit should read CFOTO/Future Publishing via Getty Images)
The heightened geopolitical climate follows an incident where Kuwait International Airport was reportedly struck by Iran early Wednesday. This occurred just a day after the U.S. Central Command announced it had successfully defended against multiple Iranian ballistic missile and drone attacks, in addition to launching "self-defense strikes" on Qeshm Island in the Persian Gulf in response to attempted attacks by Tehran.
Adding to the apprehension, Israeli Prime Minister Benjamin Netanyahu stated in an exclusive interview with CNBC that Israel and the U.S. are prepared to strike Iran again if necessary. "Israel is ready and the U.S. forces are ready. I think Iran should take that into account. I think they are taking into account, but they're playing with fire," Netanyahu remarked.
Market Performance
The instability has had a notable impact across global markets. West Texas Intermediate futures saw a gain of over 2% to close at $96.02 on Wednesday, while Brent crude advanced nearly 2% to settle at $97.81 per barrel. However, futures for both benchmarks were down about 1% on Thursday.
South Korea: The Kospi index fell by 1.24%, though the smaller Kosdaq index rose by over 2.61% as trading resumed after a holiday.
Japan: The Nikkei 225 experienced a decline of 1.77%, retreating from a record high set in the previous session. The Topix also dropped by 1.33%. SoftBank Group shares plummeted over 11.04% following news of its sale of a 3.25% stake in Indian eyewear company Lenskart Solutions.
Australia: The S&P/ASX 200 was down 1.30%.
Mainland China: The CSI 300 index decreased by 0.58%.
Hong Kong: The Hang Seng index lost 1.49%.
India: The Nifty 50 slipped 0.30%, and the BSE Sensex was down 0.33%.
In U.S. markets, futures indicated a mixed opening, with S&P 500 futures down 0.5% and Nasdaq 100 futures shedding 0.6%, while Dow Jones Industrial Average futures showed marginal gains. On Wednesday, the Dow Jones Industrial Average fell 620.72 points, or 1.21%, to 50,687.07. The S&P 500 declined 0.74% to 7,553.68, and the Nasdaq Composite dropped 0.89% to 26,853.98.
Reported by CNBC's Spencer Kimball and Lisa Kailai Han.
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