Asian markets closed Monday, February 2, 2026, under heavy selling pressure as investor sentiment deteriorated sharply at the start of the new month. A broad risk-off move swept through the region, erasing a portion of January’s gains as concerns over global growth, tightening financial conditions, and stretched valuations resurfaced. Losses were widespread, with only limited pockets of resilience amid deep declines in North Asia.

The sell-off reflected a decisive shift in positioning as investors reassessed exposure following an extended rally. Currency weakness, falling equity momentum, and renewed volatility combined to create a challenging session, particularly for markets most sensitive to global trade and capital flows.

South Korea Leads Declines as Risk-Off Move Accelerates

South Korea suffered the steepest losses in the region, with the KOSPI Composite Index plunging 5.26% to 4,949.67. Technology and semiconductor stocks bore the brunt of the sell-off as investors rapidly unwound risk positions accumulated earlier in the year. The sharp decline marked a clear break in momentum after weeks of strong gains and highlighted the market’s vulnerability to shifts in global risk sentiment.

The move suggested aggressive profit-taking rather than isolated sector weakness, as selling was broad-based across exporters, financials, and industrials. The magnitude of the decline underscored growing nervousness around demand forecasts and the sustainability of recent equity strength.

Japan also closed lower, with the Nikkei 225 falling 1.25% to 52,655.18. Exporters and manufacturing stocks weakened as the Japanese Yen Index dropped 1.10%, reflecting shifting currency dynamics and reduced confidence in near-term earnings stability.

China and Hong Kong Slide as Growth Concerns Resurface

China’s SSE Composite Index dropped 2.48% to 4,015.75, one of its sharpest single-day declines in recent weeks. Financials, property-linked stocks, and industrials all came under pressure as investors reassessed economic momentum and policy expectations. The decline pushed the index back toward recent support levels, raising concerns about short-term trend stability.

Hong Kong followed closely, with the Hang Seng Index tumbling 2.38% to 26,736.25. Technology and consumer stocks led the losses as risk aversion intensified across China-linked assets. The sharp pullback reflected fading confidence after January’s rebound and renewed caution around earnings visibility and capital flows.

Despite ongoing structural support measures, the session highlighted how quickly sentiment can reverse when global macro uncertainty reasserts itself.

India Resilient, While Australia Joins the Downtrend

India stood out as a relative outperformer, with the S&P BSE Sensex rising 0.64% to 81,239.98. The gain was driven by selective buying in domestic-oriented sectors, suggesting that local growth dynamics provided some insulation from broader regional weakness. However, the advance did little to offset losses elsewhere in Asia.

Australia’s S&P/ASX 200 declined 1.02% to 8,778.60, pressured by weakness in mining, financials, and energy stocks. The sell-off was compounded by currency weakness, as the Australian Dollar Index fell 1.18%, signaling reduced appetite for commodity-linked assets and global risk exposure.

Currency Weakness Amplifies Equity Pressure; Malaysia Closed

Currency markets reinforced the risk-off tone. Both the Japanese yen and Australian dollar weakened notably, removing a key source of support for exporters and regional equities. The synchronized decline in currencies and stocks suggested rising concern about external demand and tightening global financial conditions.

In Southeast Asia, the Malaysia – Kuala Lumpur Stock Exchange was closed for Federal Territory Day, reducing overall regional liquidity. The holiday absence likely amplified price swings elsewhere, as fewer markets were open to absorb selling pressure.

Outlook: Volatility Returns as Markets Reprice Risk

Looking ahead, Asian markets may face continued volatility as investors recalibrate expectations following January’s strong performance. Key risks include further deterioration in global growth indicators, currency instability, and cautious earnings guidance in export-heavy sectors. Markets will closely monitor upcoming economic data, central bank signals, and developments in China’s policy outlook for signs of stabilization.

While short-term sentiment has clearly turned defensive, the depth of the sell-off may also set the stage for selective opportunities if macro conditions stabilize. For now, caution dominates, and markets appear poised for a period of consolidation as investors reassess risk in the early stages of February.