Asia report: Kospi leads losses as oil prices surge

(Sharecast News) - Asia-Pacific markets fell sharply on Monday, with South Korea posting its worst session in 19 months, as oil prices surged after Iran reportedly said it had closed the Strait of Hormuz.

Brent crude futures jumped 8.94% on ICE to $84.69 per barrel and the NYMEX quote for West Texas Intermediate rose 8.62% to $77.37.

More than 14 million barrels per day transited through the Strait on average last year, accounting for nearly a third of the world's seaborne crude exports, according to Kpler data.

"Stock markets took a sharp hit while bonds faced heavy selling as Iran intensified its attacks on the US and its allies in the Middle East," said Patrick Munnelly, market strategy partner at TickMill.

"This escalation sent oil prices soaring and reignited concerns about inflation, while the collar gained strength."

He added that "all eyes remain on oil, which continued its upward climb as tensions between the US, Israel, and Iran escalated further".

"In response, Tehran threatened to shut down the Strait of Hormuz, a vital route for global petroleum shipments.

"Brent crude surged past $80 per barrel after jumping over 7% on Monday alone."

Munnelly noted that "the MSCI Asia Pacific Index dropped as much as 2.8%, marking its steepest two-day decline since April," while "futures for equity indexes in both the United States and Europe also slipped by roughly 1%, signalling that more losses could be on the horizon."

He said the spike in crude had "sparked worries about inflation and dampened sentiment around global bonds, leading traders across Asia-Pacific markets to offload government debt," adding that "from Sydney to Tokyo, traders have been shedding government bonds since early this week, bracing for the potential fallout of a prolonged geopolitical crisis that could keep oil prices elevated and drive inflation higher."

As a result, "government bonds in major economies like the US, Japan, Australia, New Zealand, and South Korea have all seen their values decline, losing their luster as safe-haven assets."

Tokyo retreats on unemployment, capital spending data

In Japan, the Nikkei 225 dropped 3.06% to 56,279.05 and the Topix fell 3.24% to 3,772.17.

Sumitomo Dainippon Pharma slumped 19.1%, TDK lost 10.38% and Mazda Motor declined 9.34%.

Economic data showed Japan's unemployment rate held at 2.6% for a fourth straight month through December, up from 2.4% in June and a cycle low of 2.2% in mid-2024, before ticking up to 2.7% in January.

The jobs-to-applicants ratio edged up to 1.19 in December from 1.18 in October and November, the lowest level since January 2022, after peaking above 1.30 in late 2023.

While the labour market remained structurally tight, with the working-age population down 16% from its 1995 peak and the Bank of Japan's Tankan employment diffusion index at -35 in mid-2025, new job openings contracted year on year and firms are managing headcount more conservatively.

Wages remained central to policy, with 2025 spring negotiations delivering headline pay rises of 5.46%, the strongest since the early 1990s, though real wage growth only recently returned to flat as food-driven inflation eroded gains.

Separate data showed capital spending rose 6.5% in the fourth quarter of 2025, accelerating from 2.9% previously and beating expectations of 3.0%, marking a fourth straight quarter of growth.

Non-manufacturing investment climbed 10.1%, supported by construction at 14.9%, real estate at 40.7%, goods rental and leasing at 26.0% and services at 2.5%, while manufacturing was flat as gains in food, chemicals, iron and steel and fabricated metals were offset by declines in petroleum and coal, production machinery and information and communications.

China stocks in the red as well

Mainland Chinese markets also retreated, with the Shanghai Composite down 1.43% to 4,122.68 and the Shenzhen Component losing 3.07% to 14,022.39.

EGing Photovoltaic Technology fell 10.08%, Zhejiang Tiantai Xianghe Industrial dropped 10.03% and Beijing Vantone Real Estate shed 10.02%.

In Hong Kong, the Hang Seng Index slipped 1.12% to 25,768.08 as Xinyi Solar Holdings declined 6.33%, Zijin Mining Group lost 6.13% and BYD Electronic International fell 5.83%.

Kospi returns from holiday with a plunge

South Korea's Kospi 100 plunged 8.06% to 6,612.96 as trading resumed after a public holiday, marking its steepest one-day fall in 19 months.

LG Chemicals dropped 13.53%, Korea Electric Power Corporation fell 12.99% and Hanmi Semiconductor slid 12.83%.

Munnelly said "South Korea's Kospi index, which had been one of the top-performing stock markets globally this year, plunged ... after reopening following a long weekend."

The S&P Global South Korea manufacturing PMI came in at 51.1 in February 2026, easing slightly from 51.2 in January but signalling a third consecutive month of expansion.

Firms reported stronger output and solid new orders, supported by a strengthening semiconductor industry, though employment contracted at the fastest pace since September 2020 amid restructuring and non-replacement of departing staff.

Companies also reported rising operating costs due to higher raw material prices and exchange rate volatility, while sentiment for the year ahead remained positive.

Sydney in the red as housing approvals fall

In Australia, the S&P/ASX 200 fell 1.34% to 9,077.30, with Life360 down 17.34%, Pro Medicus off 9.03% and Liontown Resources losing 9.01%.

Data showed total dwellings approved dropped 7.2% month on month to a 19-month low of 14,564 units in January, defying expectations of a 5.5% increase and following a 14.9% slump in December.

Approvals for private sector dwellings excluding houses fell 24.5%, while permits for private sector houses rose 1.1%.

Regionally, approvals declined in New South Wales, Victoria, Queensland and South Australia, but rose in Western Australia and Tasmania.

On an annual basis, dwelling approvals fell 15.7%, reversing a 1.1% rise in December.

Across the Tasman Sea, New Zealand's S&P/NZX 50 eased 0.27% to 13,620.21, with Ryman Healthcare down 4.17%, Synlait Milk falling 2.08% and Scales Corporation losing 1.95%.

Dollar advances on regional peers

In currency markets, the dollar was last up 0.18% on the yen to trade at JPY 157.67, as it gained 0.92% against the Aussie to AUD 1.4226 and advanced 0.88% on the Kiwi to change hands at NZD 1.6980.

Reporting by Josh White for Sharecast.com.