Seoul shares collapsed more than 12 per cent as Asian equity markets were hit by panic selling Wednesday, while oil rose amid fears the US-Israel war on Iran will fan inflation and hammer the global economy.
As the joint strikes on the Islamic Republic moved into a fifth day, observers warned that the continued choking of crude supplies from the Middle East would continue to push prices higher and deal a blow to hopes for any more monetary easing.
US President Donald Trump pledged that if needed, the navy would escort oil tankers through the Strait of Hormuz — through which about a fifth of global oil supplies flow — and ordered Washington to provide insurance for shipping.
That provided some relief to traders and pared a rally in prices Tuesday.
However, Iranian strikes on several neighbours threatened to broaden the conflict, while uncertainty about how long the war would go on and news that some oil fields in the region had been closed continued to put upward pressure on the commodity.
Both main oil contracts rose around one per cent Wednesday.
West Texas Intermediate has soared 12 per cent to more than $75 since last Friday, before the attacks began, while Brent is up more than 13 per cent to sit above $82.
With some warning that they could top $100 a barrel, equity markets are taking a pounding.
“Asian equities are now staring at a third consecutive day of losses, and the reason is not mysterious,” wrote Stephen Innes at SPI Asset Management.
“When crude edges higher, the invoice lands hardest in Asia, where imported energy is not just a line item but a structural dependency.
“Export-driven economies suddenly find themselves recalculating margins with a more expensive barrel sitting quietly in the background of every factory floor and shipping lane.”
Seoul was at the forefront of the selling, having rallied to multiple record highs since the start of the year on the back of the AI tech boom.
Trading on the Kospi and Kosdaq was halted after they both sank more than eight percent, and when business resumed, they extended losses.
The Kospi crashed more than 12 per cent — after shedding more than seven percent Tuesday — as panic-selling set in, and traders unwound their positions
That left the index suffering its worst two-day collapse since 2008 during the global financial crisis.
Chip giants Samsung and SK hynix, which have been at the forefront of Seoul’s surge this year, dived around 10 per cent.
Japan’s Nikkei 225 was off more than four percent, with chipmakers Advantest and Tokyo Electron losing more than four per cent.
Elsewhere in Asia, Hong Kong, Sydney, Singapore, and Taipei all dived more than two per cent, while Bangkok tumbled eight per cent to also spark a trading halt. Shanghai, Wellington, Manila, and Jakarta were also deep in negative territory.
The selling followed big losses in Europe, where London fell 2.8 per cent but both Frankfurt and Paris dropped by more than three per cent — hit by a spike in natural gas prices to their highest levels since Russia’s invasion of Ukraine.
