Asian markets mixed as China growth surprise meets Iran war fears

Asian markets opened largely lower on Monday as the shadows of the Iran war and high oil prices continued to weigh on the sentiment.

The shipping disruptions in the critical Strait of Hormuz kept the oil prices above $100 a barrel, leaving traders more focused on inflation risk.

The cautious sentiment outweighed some optimistic signals, such as China’s stronger-than-expected January-February data, which showed that industrial output rose 6.3% from a year earlier, retail sales were up 2.8%, and fixed-asset investment unexpectedly expanded 1.8%.

Nikkei 225 opens in red for third straight day

Tokyo set the tone for the region, with the Nikkei 225 falling 1.3% to 53,138.42 by the midday break and the broader Topix losing 0.7% to 3,602.71.

The selloff has now pushed the Nikkei down more than 9% since US and Israeli air strikes on Iran began more than two weeks ago.

Investors are grappling with the prospect of a prolonged period of higher imported energy costs, a weaker yen, and slower growth in an economy that remains heavily exposed to external fuel shocks.

The yen’s slide toward the 160-per-dollar line added another layer of unease, prompting Finance Minister Satsuki Katayama to warn that the government stood ready to take decisive action in financial markets.

Seoul initially bucked that regional mood, with the Kospi opening 23.58 points, or 0.43%, higher at 5,510.82.

The early rise suggested bargain hunting and some confidence that Korean equities had already absorbed part of the external shock, but that optimism did not hold as trading developed.

By 11:20 AM (KST), the Kospi had turned lower, down 7.53 points, or 0.14%, at 5,479.71, as foreign and institutional investors sold market heavyweights and the oil spike continued to sap sentiment.

China and Hong Kong cautious

Mainland investors had better domestic data to work with than most of their regional peers, yet the numbers were not enough to produce a convincing risk-on response.

The market backdrop remained dominated by war-driven energy concerns and the possibility that higher oil prices will weigh on margins, demand, and policy flexibility across Asia.

In Hong Kong, the Hang Seng was muted in early trading on Monday after Friday’s 251-point fall, a subdued start that reflected the same tension running through the region.

But, the index is gaining some momentum at press time as it is trading around 25,753.08 levels, 1.13% up from the previous close.

China's CSI 300 index also remained under pressure as it was trading 0.55% down at 4,643.43 levels.

Indian benchmarks slip early

Indian equity benchmarks opened slightly in the red on Monday amid mixed signals from global markets.

The Sensex fell 106.92 points, or 0.14%, to 74,457.00, while the Nifty declined 19.85 points, or 0.09%, to 23,131.25.

Market breadth remained weak, with 980 stocks advancing, 1,656 declining, and 218 unchanged.