The escalating conflict in the Middle East, along with fading hopes for ceasefire talks, further weighed on market sentiment. The possible deployment of U.S. ground forces further heightened fears of the conflict turning into a massive regional war.
With Asian markets mostly opening mixed on Tuesday, South Korean stocks took the brunt of losses as the won weakened to around 1,520 for the first time since the 2008 global financial crisis.
The Korean won weakened sharply, trading at 1,522.60 per dollar in morning trade, marking its lowest level since March 2009. Prolonged geopolitical tensions, elevated oil prices, and strong dollar demand are expected to keep pressure on the exchange rate.
Such geopolitical risks also took a heavy toll on South Korean equities. The benchmark KOSPI fell 1.14 percent to 5,215.47 points shortly after the day's trading began, while the junior KOSDAQ declined 1.47 percent to 1,090.03.
These losses came after the combined market capitalization of the KOSPI and KOSDAQ shrank by about 840 trillion won in March alone, as energy price shocks and supply uncertainties rattled investor confidence. Samsung Electronics and SK hynix together accounted for roughly 372 trillion won of the decline, while cyclical stocks such as Hyundai Motor and HD Hyundai Heavy Industries also posted sharp losses.
Shares of Samsung Electronics fell 3.49 percent to 170,150 won, while SK hynix dropped 5.96 percent to 821,000 won in early trade, as broader market weakness and geopolitical risks weighed on sentiment.
Broader losses were seen across sectors. In autos, Hyundai Motor fell 3.73 percent to 452,000 won and Kia dropped 3.70 percent to 145,900 won, Hyundai Mobis declined 4.15 percent to 381,500 won.
Energy and industrial shares also weakened, with LG Energy Solution down 3.17 percent to 397,000 won, SK Square falling 6.67 percent to 476,000 won, and Hanwha Aerospace losing 4.66 percent to 1,247,000 won. HD Hyundai Electric slipped 3.44 percent to 842,000 won.
Financials were lower, as KB Financial Group fell 2.33 percent to 142,500 won and Shinhan Financial Group declined 2.65 percent to 88,100 won, while Samsung Life Insurance dropped 3.42 percent to 212,000 won.
Among tech and platform stocks, Naver fell 2.42 percent to 202,000 won, Samsung Electro-Mechanics dropped 3.73 percent to 413,000 won, and Samsung SDI edged down 0.48 percent to 410,500 won.
Hanwha Ocean was the only gainer, rising 4.40 percent to 123,400 won.
Meanwhile, Wall Street closed mixed overnight. The Dow Jones Industrial Average edged up 0.11 percent to 45,216.14, while the S&P 500 fell 0.39 percent to 6,343.72 and the Nasdaq Composite dropped 0.73 percent to 20,794.64. Semiconductor stocks led losses, with Micron plunging 9.8 percent amid concerns over Google's "TurboQuant" technology, which could improve computing efficiency, though its impact on memory demand remains uncertain
Oil prices rose after U.S. President Donald Trump warned he would "obliterate" Iran's energy infrastructure if a ceasefire is not reached soon, while inflation data also weighed on Japan's stock market. The Nikkei 225 fell 1.61 percent to 52,738.55 in morning trade, with chip-related shares leading losses as Advantest dropped 4.40 percent and Tokyo Electron declined 5.25 percent. Tokyo's core CPI rose 1.7 percent in March from a year earlier, below market estimate of 1.8 percent.
Hong Kong's Hang Seng Index rose 0.48 percent to 24,868.36, China's Shanghai Composite edged up 0.02 percent to 3,924.07, while Taiwan's TAIEX fell 0.62 percent to 32,317.38.
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