Asia-Pacific markets extended their declines on Wednesday as investors monitored the escalating Iran conflict and assessed a raft of regional economic data.
Investor attention also turned to China’s annual parliamentary meetings, known as the “Two Sessions”, which begin with a consultative congress later in the day, followed by the opening of the National People’s Congress on Thursday.
Premier Li Qiang is expected to unveil key economic targets at the gathering, largely shaped during policy discussions held in December.
By 11:40 am AEDT (12:40 am GMT), Australia’s S&P/ASX 200 was down 1.6%, Japan’s Nikkei 225 had fallen 2.3%, and South Korea’s KOSPI 200 had dropped 5%.
Data from Statistics Korea showed industrial production declined 1.7% month-on-month in January on a seasonally adjusted basis, well below expectations for a 0.5% rise and reversing a revised 1.5% increase in December.
The fall marked the first contraction in three months and reflected weakness in manufacturing, particularly semiconductors.
On an annual basis, however, production jumped 7.1%, comfortably beating forecasts for a 2.2% increase and accelerating from a revised 1.4% gain in the previous month.
Maenwhile, retail sales rose 2.3% month-on-month in January 2026, accelerating from a 0.6% gain in December and marking the fastest growth in three months, signalling a rebound in household spending at the start of the year.
In Australia, final services PMI data from S&P Global came in at 52.8, slightly above expectations of 52.2 but down from 56.3 previously.
"Australia’s service sector continued to expand midway through the first quarter, according to the latest PMI® data. Despite easing since the start of the year, the rates of new business and activity growth remained solid. Foreign demand also continued to improve.
"To cope with rising workloads, firms raised their staffing levels at the quickest rate in almost three years. That said, business confidence declined."
Separate figures from the Australian Bureau of Statistics showed gross domestic product rose 0.8% in the December quarter of 2025 and 2.6% over the year on a seasonally adjusted, chain volume basis.
Grace Kim, ABS head of National Accounts, said: “There was broad based economic growth in the quarter, with rises observed in a large majority of industries. Public and private demand each contributed 0.3 percentage points to GDP growth.”
“GDP per capita increased for the fourth consecutive quarter and is now 0.9 per cent higher than a year ago, the highest through the year growth since December quarter 2022.”
Japan’s final services PMI, also from S&P Global, came in at 53.8, in line with expectations and unchanged from the prior reading.
"Services companies in Japan signalled another solid increase in business activity in February, with growth supported by an accelerated rise in new work. The improved demand environment led firms to express greater optimism around the 12-month outlook for business activity.
"However, job creation slowed across the sector amid signs of stronger cost pressures. At the same time, prices charged by service providers increased at the quickest pace for nearly 12 years."
Overnight on Wall Street, U.S. benchmarks closed lower, with the Dow Jones Industrial Average down 0.8%, the S&P 500 falling 0.9% and the Nasdaq Composite declining 1%.
In commodities, Brent crude climbed 4.7% to settle at US$81.40 per barrel, while spot gold dropped 4.4% to US$5,088.84 per ounce.
Chinese equities were also weaker on Tuesday, with the SSE Composite Index falling 1.4% to 4,122.7 and the CSI 300 sliding 1.5% to 4,655.9.
Hong Kong’s Hang Seng Index lost 1.1% to 25,768.1, while India’s BSE Sensex was closed for a public holiday.
European markets also finished sharply lower. The FTSE 100 dropped 2.8% to 10,484.1, Germany’s DAX fell 3.4% to 23,790.7, and France’s CAC 40 declined 3.5% to 8,103.8.
