Asian markets plunged on Wednesday, led by a dramatic selloff in South Korea, as investors rushed to unwind chipmaker bets amid rising fears that a prolonged Middle East war could trigger a sustained energy shock. South Korea Triggers Circuit Breaker KOSPI Index slumped more than 11%, prompting a circuit breaker. Two-day losses widened to 17% — the steepest since 2009 . The Korean won dropped to a 17-year low , compounding market stress. Elsewhere: Nikkei 225 fell 4.3% Taiwan stocks dropped 3.6% S&P 500 futures slipped 0.6% Key Point: Heavy profit-taking in semiconductor stocks amplified the regional selloff. Chipmakers had been among the hottest trades in recent months, driven by AI demand. Investors are now cashing out of crowded positions. Oil Surge Drives Inflation Fears Brent crude rose more than 13% this week to US$82.08 per barrel. Prices retreated slightly after Donald Trump ordered insurance guarantees for Gulf shipping and signalle...
Global markets extended losses as a widening Middle East conflict triggered another spike in oil and natural gas prices, intensifying concerns about inflation and the global economic outlook.
Europe Leads Sell-Off
STOXX Europe 600 plunged 2.7% in early trading — its steepest one-day drop since April — after already sliding 1.7% the previous session.
US markets looked set to follow:
S&P 500 Index futures fell 1.6%
This follows a volatile Wall Street session where stocks recovered late but failed to ease broader concerns.
Key Point: Markets are pricing the conflict primarily as an inflation shock driven by surging energy costs.
Oil and Gas Spike Sharply
Brent crude rose another 4.2% to US$80.96, up more than 11% for the week.
Natural gas markets saw even sharper moves:
European LNG prices jumped 25% Tuesday after surging 39% Monday
US natural gas futures gained nearly 6%
Qatar halted LNG production, affecting roughly 20% of global supply, while Iran declared the Strait of Hormuz closed to marine traffic — a chokepoint for about one-fifth of global oil shipments.
Inflation Fears Resurface
The energy surge complicates the inflation fight for central banks, especially the US Federal Reserve.
ISM manufacturing data already showed rising factory gate prices before the Iran strikes, adding to price pressures.
According to CME FedWatch:
95.4% probability the Fed holds rates at its March 18 meeting
June hold odds have risen to slightly above 50%
The US dollar index climbed to a six-week high near 99.07 as investors sought safety in the greenback.
US 10-year Treasury yields rose to 4.1%.
Key Point: Higher energy prices may delay rate cuts as inflation risks re-emerge.
Markets Weigh Duration of Conflict
Investors are assessing whether the crisis is temporary or prolonged.
Deutsche Bank analysts noted that front-month energy contracts spiked sharply, while longer-dated contracts moved less — suggesting markets still expect the conflict to be temporary.
Israeli Prime Minister Benjamin Netanyahu said the war is not expected to last years.
Safe Havens and Risk Assets
Dollar strengthened
Gold fell 1.2% to US$5,266
Bitcoin dropped 3.6%
Despite geopolitical stress, gold pulled back as the stronger dollar weighed on prices.
Big Picture
The conflict adds another layer of uncertainty to markets already grappling with:
Tariff-related price pressures
AI-driven economic uncertainty
Fragile global growth
If energy prices remain elevated, inflation could reaccelerate, narrowing the window for central bank easing and increasing volatility across global equities.
Overall theme: Escalating Middle East tensions are driving an energy shock that is reviving inflation fears and deepening the global equity sell-off.
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