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 inflation is set to accelerate as the Iran conflict disrupts energy markets, though economists expect economic growth to remain broadly resilient — for now.
A Bloomberg survey shows rising concern that higher oil and gas prices will spill over into consumer costs worldwide.
Inflation Set to Accelerate
According to the Bloomberg survey:
Half of respondents expect inflation to rise faster in the eurozone
A similar share foresee higher inflation in the US
Nearly 40% expect faster price growth in China
The projected increase ranges between 0.3 to 0.9 percentage points above prior forecasts.
Key Point: The Iran conflict is expected to lift global inflation through energy-driven price pressures.
Energy Shock at the Core
The main inflationary driver is oil and gas.
Roughly 20% of global seaborne oil supply passes through the Strait of Hormuz — a critical chokepoint that has effectively stalled amid the conflict.
Higher energy prices could trigger:
Rising airfares
Increased distribution and logistics costs
Broader supply-chain disruptions
If the conflict persists, second-round effects could further entrench inflation.
Growth Outlook Remains Stable — For Now
Despite inflation risks, most economists believe the war will have minimal impact on GDP in:
The United States
The eurozone
China
However, the longer the conflict drags on, the greater the risk to growth expectations.
Key Point: Growth impact is currently limited, but duration of the conflict is the critical variable.
Winners and Losers
According to Bloomberg Economics analysis:
Potential losers from sustained high oil prices:
China
Europe
India
Potential beneficiaries:
Russia
Canada
Norway
The US faces a mixed outcome. While higher fuel prices squeeze consumers, America’s status as an oil exporter helps cushion the broader economic drag.
Big Picture
Markets are already grappling with tariff tensions and policy uncertainty. The Iran conflict introduces a fresh energy shock at a time when central banks are trying to anchor inflation expectations.
If oil prices remain elevated, policymakers may face a renewed dilemma between controlling inflation and supporting growth.
Overall theme: The Iran war is likely to reignite global inflation pressures, though economic growth remains intact — for now.
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