Asian Markets Face Volatility Amid Middle East War and Trump Turmoil

Asian stock markets are experiencing significant volatility on April 6, 2026, as investors react to a new ultimatum from President Donald Trump regarding the Strait of Hormuz. The region is particularly exposed to the instability of the U.S.-Israeli war with Iran due to its position at the forefront of the daily trading cycle, often inheriting a late-night U.S. News cycle before opening new sessions in Tokyo, Hong Kong, and Singapore.

On Sunday, April 5, 2026, President Trump issued threats to attack Iranian power plants and civilian infrastructure starting Tuesday, April 7, if Tehran fails to fully reopen the Strait of Hormuz. The waterway is a critical oil chokepoint through which approximately one-fifth of the world’s oil supplies flow. This escalation follows the rescue of an American airman in Iran last week.

The White House confirmed on April 5 that a deadline of Tuesday at 8 p.m. Eastern Time has been set for Iran to reach a deal with the U.S. President Trump is scheduled to hold a press conference with the military at the Oval Office at 1 p.m. On Monday, April 6.

Iran has rejected the ultimatum, stating that the Strait of Hormuz will only be fully reopened after the damage caused by the war is compensated. Tehran has continued to carry out strikes on economic and infrastructure targets in the Gulf region, including the oil headquarters of Kuwait.

Regional Market Volatility

The conflict, which began with U.S. And Israeli airstrikes against Iran on February 28, 2026, has caused major stock benchmarks across Asia to fluctuate sharply. In March, Japan’s Nikkei 225 sank 13 per cent, while India’s Sensex tumbled almost 12 per cent and the Nifty 50 fell by over 11 per cent.

South Korea’s Kospi recorded one of the most severe slumps, dropping over 19 per cent during March. Although the index rose almost 8 per cent in early April following comments from President Trump on April 1 suggesting the war would soon end, this recovery has since faltered. Since February 28, the Kospi is down overall by more than 13 per cent.

South Korea’s Energy and Tech Exposure

South Korea is heavily dependent on the Strait of Hormuz, with roughly 70 per cent of its oil imports routed through the channel. This dependency has led President Lee Jae Myung to urge citizens to save every drop of fuel.

The tech-heavy Korean market is also facing supply chain disruptions. Major companies Samsung Electronics and SK Hynix rely on the strait for the import of bromine and helium, both of which are essential for semiconductor manufacturing.

Despite the sell off, we are not overly concerned as the market is dominated by Samsung Electronics and SK Hynix, where direct energy costs are a small share of their overall cost base. There is also ample scope to pass any incremental costs to their customers given the pricing power they have in this AI‑driven memory cycle.

Simbarashe Mangwiro, senior investment analyst at Morningstar Wealth

Mangwiro noted that while supply disruptions to key inputs and sustained high energy prices warrant monitoring, these are secondary to the larger drivers of AI-led demand growth.

China’s Market Stability

While other Asian markets have struggled, China has avoided the full extent of the sell-off. The Shanghai Composite fell over 6 per cent in March, and the CSI 300, which tracks the largest companies in Shanghai and Hong Kong, fell by just under 6 per cent in the same period. Hong Kong’s Hang Seng was down by approximately 7 per cent.

China’s relative stability is attributed to aggressive state intervention. The People’s Bank of China has increased liquidity injections, and state-backed vehicles, including Central Huijin Investment—a unit of China’s sovereign wealth fund—frequently purchase stocks to stabilize the onshore market.

China has utilized its large oil reserves and domestic energy supplies to maintain production. The government has also implemented an anti-involution policy to curb destructive competition and tackle excess capacity across industrial and manufacturing sectors to stabilize margins.

The energy crisis has allowed Chinese exporters to increase their global market share as rivals are shocked by rising costs. Beijing has continued to push investment into high-end energy sectors, such as electric vehicles and solar panels, to offset weak domestic demand.