Across Asia, markets sank into the red following the decision by the Obama administration to launch an air campaign against ISIS forces in Iraq. Well it’s difficult to determine what exactly caused markets to head south, the drops did seem to coincide with the Obama administration’s decision to bomb Iraq.

Asian Markets

Uncertainty has already been building up in many Asian markets. With the American Fed looking to wind down its quantitative easing program, most Asian markets are set for potential periods of instability. Let’s just say that many economists and investors are already getting spooked, so when news breaks of an American-led bombing campaign, investors have a tendency to get spooked.

Japan’s Nikkei Leading the Way in Asian Markets

It should come as no surprise that the Japanese stock market suffered one of the largest drops of the day. The matter of war has been weighing heavily on the mind of the Japanese. Having been a pacifist country since the conclusion of World War II, Japan has begun to beef up its military in the face of increasing Chinese aggression.

The ramp up in military preparedness is a touchy issue for many Japanese. For one, many would simply prefer to stick to pacifism and avoid any chance of repeat aggressions as seen in the second World War. At the same time, Japan’s population is aging, public debt levels are extraordinarily high, and the economy has set to emerge from 20 plus years of stagnation. Simply put, Japan is not in the best position to support a war machine.

Asian Markets: China and Hong Kong Treading Water

The Hong Kong Hang Seng index lost about 56 points, good for a .25 percent decline, but compared to Japan, the loss was negligible. Just a day earlier, however, the Hang Seng index had lost about .8 percent following bad performance from casino linked stocks. Already at two week lows, the Hang Seng simply may not have had much more room to give.

China’s mainland Shanghai Index actually posted on of the few gains in Asia, though the gain was good for less than 7 points and .31 percent. This gain certainly doesn’t inspire confidence, but is welcomed news for an index that has suffered losses in recent weeks. Since peaking at 2,223 points on August 4th, the Shanghai index has retreated to 2,194 points.

Despite strength in the Chinese economy and surging exports, lingering concerns over the housing market, bad debt problems, and other issues are creating uncertainty. Traditional blue chip companies have suffered particularly bad losses over the last few days.

S.E. Asian Markets Also Down

South East Asia, which has been one of the hottest regions for growth in recent years, also suffered some serious setbacks. Singapore’s Strait Times Index dropped by .76 percent, good for just over 25 points, to end the week at 3,288 points.

Singapore is closely watched by many analysts both because the city-state is a regional financing hub and also because it acts as a canary. Developments in Singapore often reflect sentiments regarding the broader region.

Malaysia’s KLSE index was also down about .45 percent. The exchange has surged to all-time highs lately, closing in on the 1,900 point mark after bottoming out at only about 860 points during the Great Recession. Despite strong economic performance as of late, Malaysia still remains dependent on global trade winds.

Meanwhile, the Jakarta Composite Index suffered a slight decline, good for .26 percent. Indonesia has been suffering some turbulence as of late, owing to the contentious election of the country’s new President, Jokowi, whom many believe will be a reforming and modernizer. Whether he’ll actually be able to achieve change given the complex political system in Indonesia, however, remains to be seen.