Asia-Pacific markets traded mostly lower on Tuesday, March 3, as geopolitical tensions surrounding Iran entered their fourth consecutive day, dampening investor sentiment and triggering sharp selloffs in several key regional indices.

Heightened uncertainty over potential energy supply disruptions and broader regional instability pushed investors toward defensive positioning, weighing particularly on technology and growth stocks.

South Korea Leads Regional Declines

South Korea’s KOSPI fell sharply, dropping around 3% during the session. The decline was amplified by steep losses in semiconductor heavyweights Samsung Electronics and SK Hynix, both of which slid more than 5%. In contrast, defense-related stocks surged as investors bet on rising military spending, with some names rallying over 20% amid the escalating regional tensions.

Australia and Japan Extend Losses

Australia’s S&P/ASX 200 declined 1.2%, reversing gains from the previous session when it had been one of the few markets in the region to close higher.

In Japan, the Nikkei 225 dropped 2.29%, extending losses from Monday, while the TOPIX fell 2.24% as investors trimmed exposure to export-oriented and technology stocks. A stronger Japanese yen during risk-off trading also weighed on exporter earnings expectations.

Mixed Performance in Greater China and India

Hong Kong’s Hang Seng Index bucked the broader regional trend, rising about 0.3% in a modest rebound. On the mainland, the CSI 300 slipped 0.5%, while the Shanghai Composite edged slightly lower.

India’s NIFTY 50 fell 1.24% as investors reacted cautiously to global risk sentiment and higher commodity price volatility. Traders are also watching for potential policy support measures from Beijing if market weakness persists.

Wall Street Closes Mixed After Late Rebound

Overnight in the U.S., markets showed resilience despite early weakness. The S&P 500 edged up 0.04%, recovering late in the session. The tech-heavy Nasdaq Composite rose 0.36% after rebounding from an earlier 1.6% decline.

Meanwhile, the Dow Jones Industrial Average fell 73.14 points, or 0.15%, closing at 48,904.78 after being down nearly 600 points at its intraday low. Investors are now turning their focus to upcoming U.S. economic data releases for clearer signals on interest rate direction.

Market Outlook

With geopolitical tensions intensifying, investors are closely monitoring potential spillover effects on oil prices, inflation expectations, and global trade flows. Defensive sectors and energy stocks may continue to outperform if uncertainty persists, while technology and cyclical shares remain vulnerable to risk-off sentiment.

Market strategists warn that sustained volatility could lead to tighter financial conditions if capital flows shift rapidly into safe-haven assets. For investors, maintaining diversification and closely tracking developments in the Middle East will be crucial in navigating the current volatility-driven environment.