Asian shares swoon, Kospi sinks 12 pc, as war with Iran widens, oil surges higher
Asian markets plunged as the Iran-US-Israel conflict escalated, with South Korea’s Kospi falling over 12% and oil prices surging. Investor fears over supply disruptions through the Strait of Hormuz drove global market volatility and rising inflation concerns
Bangkok: Asian shares tumbled on Wednesday, with South Korea’s benchmark plunging more than 12 per cent, while oil prices climbed even higher as the war with Iran widened.
Worries over Iran have hammered most world markets, spooking investors who fear more spikes in oil prices may grind down the global economy and sap corporate profits.
“I think the Iran situation is getting out of hand, and I think that US President Donald Trump miscalculated enormously,” said Francis Lun, CEO of Venturesmart Asia. “The situation is very grim.” South Korea’s Kospi led the regional losses as energy security concerns vanquished optimism over the boost computer chipmakers like Samsung Electronics and SK Hynix have been getting from expanding use of artificial intelligence.
The Kospi sank 12.1 per cent to 5,093.54. Samsung’s shares dropped 11.7 per cent, while SK Hynix gave back 9.6 per cent.
The Korea Exchange temporarily halted trading for the Kospi index, while a circuit breaker was also triggered on the tech-oriented Kosdaq after it fell by more than 8 per cent. It later dropped nearly 14 per cent.
South Korea’s stock market has been one of the world’s best performers this year, but its economy depends heavily on trade and fuel imports, which are threatened with disruptions to traffic through the Strait of Hormuz, the narrow gateway to the Persian Gulf through which roughly a fifth of globally traded oil passes.
The rise in oil prices appeared to moderate after US President Donald Trump announced Tuesday that he had ordered the US Development Finance Corp. to provide political risk insurance and guarantees for the financial security of all maritime trade.
“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible,” Trump said in a message posted by the White House on X.
The price of US benchmark crude oil climbed 1.3 per cent to USD 75.53 per barrel. Brent crude, the international standard, gained 1.7 per cent to USD 82.74 per barrel. Its price has jumped more than 13 per cent since the war began.
“Trump’s assurances of the US underwriting shipping insurance against Middle East conflict risks and even US naval escorts only mitigate, but do not eliminate, enduring upside risks to oil prices,” Mizuho Bank said in a commentary.
The increased insurance costs filtering through to shipping would ultimately cost an extra USD 5 to USD 15 a barrel.
It said that “evolving Middle East risks, entailing escalating attacks, means that the war premium’ remains firmly intact.” In Tokyo, the Nikkei 225 shed 3.9 per cent to 54,059.47. Like South Korea and Taiwan, Japan depends heavily on imports of oil and natural gas from the Persian Gulf.
Elsewhere in Asia, the Hang Seng in Hong Kong fell 2.9 per cent to 25,023.18, and the Shanghai Composite index shed 1.2 per cent to 4,074.22.
In Australia, the S&P/ASX 200 declined 1.9 per cent to 8,901.20.
Taiwan’s Taiex lost 4.4 per cent and shares in Bangkok sank 8 per cent.
On Tuesday, the S&P 500 finished with a loss of 0.9 per cent, at 6,816.63, after dropping as much as 2.5 per cent on concerns over the war’s damage to the economy. The Dow Jones Industrial Average pared its loss to 0.8 per cent, closing at 48,501.27.
The Nasdaq composite fell 1 per cent to 22,516.69.
In the bond market, Treasury yields leapt in the morning with worries about inflation. The yield on the 10-year Treasury briefly rose above 4.10 per cent before pulling back just below 4.06 per cent. It was at 4.05 per cent late Monday and just 3.97 per cent on Friday.
Higher yields can make it more expensive for US households and businesses to borrow money, affecting everything from mortgages to bond issuances. They also put downward pressure on prices for stocks and all kinds of other investments.
Some analysts say stocks could rebound if the war doesn’t last that long. But they acknowledge it could take a while for that to become clear, and Tuesday’s swings for markets showed how uncertain things are.
The more evident impact has been on the average price of a gallon of gasoline. Drivers in Europe and some Asian cities waited in line to fill their tanks with fuel.
While the US does not face a shortage as a net oil exporter, prices are influenced by global market trends.
In the US, a gallon of regular was selling for USD 3.11 on average, up 11 cents, according to the motor club AAA, surprising some drivers at the pump. Gasoline prices were already rising before the US launched strikes on Iran, as refiners were switching over to summer blends of fuel.
Higher inflation, partly due to the war, could tie the Federal Reserve’s hands and keep it from cutting interest rates. The Fed lowered rates several times last year and indicated more cuts were to come in 2026. That would help boost the economy and job market, but lower rates can also worsen inflation.
In other dealings, the dollar fell to 157.61 Japanese yen from 157.74 yen. The euro slipped to USD 1.1592 from USD 1.1612.
The price of gold rose 0.9 per cent, while silver gained 1.5 per cent.
