Stock markets slumped across much of Asia yesterday as investors were spooked by a drop in United States share prices and concerns that higher energy prices could hurt corporate profits which have already been disappointing. The Hang Seng Index fell 1.26 per cent, Tokyo's Nikkei-225 Index slid 2.14 per cent and the Korea Composite Index lost 2.06 per cent. 'Earlier this month traders were in the mindset that there was no bad news, no matter what came out. Now everyone has gone the other way and any news is really bad news,' said Andrew Clarke, a sales trader at SG Securities. Retail investors snapped up shares in the first few weeks of the year as the Hang Seng Index rose for nine straight days. Now they are racing for the doors with hedge funds and institutional investors. 'Retail investors have been back in the market recently and it's evident that some of them have been subject to margin calls, which is exacerbating this,' said Miles Remington, the head of sales trading at BNP Paribas Peregrine. Technology stocks were hit particularly hard with South Korea's technology-heavy junior market Kosdaq plummeting 9.6 per cent in its biggest drop since September 12, 2001. The Korea exchange at one point halted Kosdaq trading after the index fell more than 10 per cent in the afternoon, further alarming investors who were eager to dump their shares. The Tokyo Stock Exchange last week was forced to shorten trading hours when a flood of sell orders almost overwhelmed its computer systems after news that internet firm Livedoor was under investigation for suspected breaches of securities laws. Traders said the trading halts would make investors quicker to sell their holdings at any sign of market weakness. And selling interest has been rising, with oil prices rebounding on global security worries and earnings news from US corporate giants failing to satisfy investors. The Dow Jones Industrial Average on Friday fell 1.96 per cent in its biggest one-day drop since March 2003 on disappointing earnings from blue-chip firms such as Yahoo, General Electric and Citigroup. Higher oil prices mean higher operating costs for most industries, particularly in Asia, which is heavily dependent on oil imports. New York oil futures for March delivery hit US$69.20 a barrel, their highest price since September 2 last year, as tensions over Iran's nuclear research programme prompted concerns over energy supply security. Iran may be referred to the UN Security Council for trade sanctions because council members suspect it is using its atomic programme for military purposes. Attacks by militants on Nigerian oil facilities and an explosion at a gas pipeline linking Russia to Georgia also helped drive oil prices higher. Traders said Asian markets would take their cue from Japan and the US over the coming week as many of the region's markets will be closing for Lunar New Year. 'Arguably with this kind of discount or correction, it puts a lot of the negative side behind us, quickly. But going into Lunar New Year a lot of people will be closing their books and going flat by Thursday,' Mr Remington said.