Asia Market Quick Take – 04 March, 2026

Asia Market Quick Take – 4 March, 2026

Key points:

• Macro: Trump mentions Iran’s military capabilities are severely reduced
• Equities: US equities dropped; energy concerns loom. Target rises, Sea Limited falls
• FX: USD rises; EURUSD falls amid geopolitical tensions and energy concerns
• Commodities: Trump vows escorts through Straits of Hormuz
• Fixed income: UK Gilts rises to 4.5% amidst inflation concerns

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• The US-Israel-Iran conflict, now in its fourth day. US President Trump stated that Iran's military capabilities are severely reduced, hinting at possible militia support but no final decision made. The Senate plans to vote on the Iran war powers resolution. Iran targeted Al Udeid base in Qatar and threatened regional economic centers, while their new defense minister was reportedly killed. Israel struck Iranian leadership in Tehran, and tensions with Hezbollah are rising. The UAE is considering military action against Iran's missile and drone strikes.
• Australia's economy grew 0.8% in Q4 2025, up from 0.5% in Q3, beating the 0.6% forecast and marking the 17th consecutive quarterly growth. Annual GDP increased 2.6%, surpassing the 2.2% expectation and was the fastest since Q1 2023.
• UK Finance Minister Rachel Reeves presented the Spring Statement, updating on growth and finances amid Middle East uncertainties. The OBR forecasted 2026 growth at 1.1%, down from 1.4%, with future years raised to 1.6%. Despite inflation challenges, defense spending and infrastructure investment were emphasized. The government targets meeting fiscal rules by 2029/2030 with £23.6 billion borrowing headroom, prioritizing the Autumn Budget for major policies.
• Euro Area annual inflation increased to 1.9% in February 2026, up from 1.7% in January and exceeding expectations. Services inflation accelerated to 3.4%, and non-energy industrial goods inflation rose to 0.7%. Energy prices continued to decline but at a slower rate, down 3.2%. Core inflation rebounded to 2.4%. Among major economies, HICP rose in France, Spain, and Italy, while slightly easing in Germany.

Equities:

• US -US equities rebounded from deep losses on Tuesday, with the S&P down 0.9%, the Dow 0.8%, and the Nasdaq 1.1%. President Trump's pledge to escort oil tankers through the Strait of Hormuz eased US-Iran conflict jitters, pulling Brent crude from its highs and stabilizing Treasury yields. Materials and industrials led declines amid energy-cost fears, while Nvidia and Tesla fell 1.3% and 2.7%. Blackstone dropped 3.8% due to $1.7 billion in net outflows from its credit fund. Markets remain tense between geopolitical energy concerns and government actions to stabilize trade. Target exceeded EPS and revenue expectations, with shares rising 6.7% due to a strong fiscal year profit outlook. AT&T maintained its FY26 and multi-year financial guidance, boosting shares by 2.4%. Sea Limited experienced a 16.5% share drop despite revenue growth, as expenses increased 28% YoY.
• EU - European stocks sank on Tuesday, further declining due to fears of an energy supply shock from the Iran conflict. The Eurozone fell 3.5% to 5,776, and the STOXX 600 dropped 3.2% to 604. Iranian attacks on GCC energy infrastructure and threats to vessels in the Strait of Hormuz doubled European natural gas prices since last Friday. Banks led losses, anticipating higher inflation and rate hikes, with Santander down 6.2%, BBVA and UniCredit falling 5%. Industrial and chemical stocks like Siemens, Schneider, and Bayer declined over 5%. Eurozone inflation exceeded expectations, reinforcing hawkish rate outlooks.
• Asia - Asian markets faced significant declines on Tuesday due to escalating Middle East tensions and rising oil prices. The Hang Seng dropped 1.1% to a two-month low of 25,768, impacted by U.S.-Israel actions against Iran and upcoming PMI releases. Notable losers included Zijin Gold Intl. (-8.7%) and Xiaomi (-4.4%), while energy stocks like ENN Energy (+4.0%) rose. The KOSPI fell 7.24% to 5,792, with large-cap exporters like Samsung Electronics (-9.88%) and Hyundai Motor (-11.72%) leading the downturn. The won weakened, affecting investor sentiment. Defense stocks, including Hanwha Aerospace (+19.83%), advanced. Japan's Nikkei 225 decreased 3.06%, and the Topix fell 3.24%, driven by inflation worries and the Bank of Japan's rate outlook. Major declines occurred in Fujikura (-3.8%) and Toyota Motor (-6.1%).

Earnings this week:

• Wednesday - Broadcom, Veeva Systems, Okta, Wix.com, Dycom, Stevanato Group, National Vision, Abercrombie & Fitch
• Thursday - Costco Wholesale, JD.com, Kroger, Marvell Technology, Samsara, Pattern Energy, Ciena, GoPro, American Eagle, Victoria's Secret
• Friday - Embraer, Algonquin Power, Genesco, Drilling Tools International

FX:

• USD extended its rally, rising 1.3% over two days amid deepening selloffs in G-10 currencies. The Bloomberg Dollar Spot Index rose 0.6%, despite trimming gains after President Trump promised insurance guarantees for Hormuz passage.
• EURUSD fell as much as 1.35% to 1.1530, recovering slightly to 1.1614 but staying below its 200-day moving average. Traders are highly bearish, impactedby Middle East tensions. European natural gas prices surged 34%, increasing inflation and recession worries.
• USDJPY rose 0.4% to 157.97, with Japan closely monitoring market movements due to its reliance on energy imports and vulnerability to oil price shocks. The yen showed strong haven characteristics among G-10 currencies. 
• AUDUSD fell 2.1% to a session low of 0.6944 amid deteriorating global risk sentiment, but later trimmed losses to 0.7043. 
• GBPUSD dropped 1.15% to a three-month low of 1.3253, as traders reduced BOE rate-cut expectations due to energy-driven inflation fears.

Commodities:

• Gold dropped over 3.6% due to a strong dollar and reduced easing prospects amid Middle East tensions. Spot gold declined to $5,088, while spotsilver fell 12% to $82. Rising energy prices increased inflation concerns, affecting Fed rate expectations. Supply disruptions added pressure.
• Oil prices rose for a second day as US-Israel attacks on Iran heightened tensions, impacting Persian Gulf energy assets. US oil futures settled above $74.50, and Brent closed over $81. Prices eased post-settlement after Trump promised to escort tankers through the Strait of Hormuz. Concerns remain as Iraq may cut 3 million barrels of output, and Saudi Arabia considers Red Sea deliveries amidst regional threats. Brent surged 11% in two days, briefly topping $85. Global energy markets face disruptions, with Qatar halting LNG production and freight costs rising sharply.

Fixed income:

• US Treasuries declined for a second day as rising oil prices led traders to reconsider expectations for Federal Reserve rate cuts. Earlier, the two-year yield surged 12 basis points to 3.59%, its highest this year, before stabilizing near 3.50%. Investors globally sold bonds amid inflation fears, following US-Israel strikes on Iran. Fed faces uncertainties over rate cuts and US spending risks.
• UK 10-year gilt yield rose to 4.5%, as BOE rate cut chances fell to 20% amid inflation concerns from rising Middle East oil prices. The two-year gilt hit 3.8%, highest since December. OBR cut 2026 growth forecast, while raising projections for 2027 and 2028.

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