Asian stocks wipe out 2026 gains as war drives inflation worries

Published Tue, Mar 31, 2026 · 10:50 AM

ASIAN stocks fell, with the key regional benchmark erasing its gain for the year, as soaring energy costs due to the Iran war raise concerns of inflation and slower growth.

The MSCI Asia Pacific Index declined as much as 1.1 per cent on Tuesday, with Samsung Electronics and SK Hynix among the biggest drags. MSCI’s emerging market gauge also wiped out its advance for 2026. 

The milestone highlights the sharp turn of fortune for the Asian market, which had started the year on a tear as investors continued to pile into the region’s artificial intelligence infrastructure stocks. With the Middle East conflict now in its fifth week, risky bets are being reduced.

The MSCI Asia gauge climbed 15 per cent from the start of the year to its record high on Feb 27, far outpacing global equities. The gain has evaporated as an outlook for tighter monetary policy and crimped supply of key materials drives a rethink of the growth thesis. 

Asian economies including South Korea, Japan and India are especially vulnerable to oil shocks given their heavy reliance on Middle East countries for imported energy. That has traders worrying about the negative impacts of higher costs on corporate profits and higher interest rates to tame inflation. BLOOMBERG