Asian Stocks Battered as Geopolitical Tensions Sap Risk Appetite

By Megan Cheah

Asian stocks dropped, tracking the weakness in U.S. technology stocks, as simmering geopolitical tensions continued to weigh on appetite for risky assets.

"The main theme overnight was energy-driven risk and technology-led weakness," said Commerzbank analysts in a note, noting the mixed stock performance in the U.S. was marked by losses in the Philadelphia Semiconductor Index.

While the S&P 500 overall was somewhat stable on Monday, there was "some weakness underneath the hood" with underperformance in U.S. semiconductor stocks, said MUFG senior currency analyst Michael Wan. This likely spilled over to Asia equities, with South Korean equities down more than 4% this morning, he said.

Investors also remained cautious as geopolitical tensions continued to brew in Europe and the Middle East. The Ukraine-Russia conflict escalated recently despite President Trump's declaration that the sides had reached an "energy ceasefire."

Ukrainian President Volodymyr Zelensky said Monday that Russian strikes had hit energy infrastructure across his country. Kremlin spokesman Dmitry Peskov said that he couldn't share any comments regarding the announced energy ceasefire as contacts continued, according to Russian state news agency TASS.

The Russia-Ukraine energy ceasefire is proving to be illusive, Rodrigo Catril, a senior foreign-exchange strategist at NAB, said in a commentary.

Meanwhile, tensions in the Middle East remained high after Iran-backed Houthi militants targeted the international airport in Saudi Arabia's capital, killing at least 13 people and injuring hundreds.

The combination of the U.S semiconductor selloff and the surging tensions battered regional markets Tuesday, with South Korea leading declines. The benchmark Kospi was down 6.9%, dragged by falls in chip-making heavyweights Samsung Electronics and SK Hynix, which were last down 8.2% and 9.1%, respectively.

Japan's Nikkei Stock Average was 2.5% lower by midday, while Taiwan's Taiex slipped 2.2%. Hong Kong's Hang Seng Index shed 1.2%, and the city's tech gauge declined 2.8%.

Despite concerns around the conflict, oil futures fell on a possible technical correction. Front-month Brent futures dropped 1.0% to $105.56 a barrel, while front-month West Texas Intermediate futures declined 1.2% to $92.65 a barrel, ICE data showed.

Asian currencies consolidated against the dollar, but may be weighed by safe-haven demand for the greenback amid the conflicts. Commonwealth Bank of Australia's Kristina Clifton expects the U.S. Dollar Index to trade higher this week because of higher energy prices amid the conflict.

The U.S. Dollar Index slipped 0.2% to 102.416, LSEG data showed. The greenback was down 0.2% at 158.24 yen but gained 0.4% to 1,339.60 won.

Government bond yields declined. The Japanese 10-year government bond yield fell 1.1 basis points to 3.003%, while Australia's 10-year yield dropped 2.7 basis points to 5.302%. New Zealand's 10-year securities yield declined 3.5 basis points to 5.015%. The U.S. bond market was closed Monday for Columbus Day, marked by some as Indigenous Peoples' Day.

Write to Megan Cheah at megan.cheah@wsj.com

(END) Dow Jones Newswires

October 12, 2026 23:04 ET (03:04 GMT)