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...
South Korea bore the brunt of Asia’s sell-off on Tuesday as soaring oil prices following US–Israeli strikes on Iran rattled markets and reignited inflation concerns across the region’s energy-importing economies.
South Korea Hit Hardest
KOSPI Index plunged as much as 5.6%, marking its worst session in nearly four months.
The Korean won fell up to 2% to 1,467.80 per US dollar — its weakest level in more than three weeks.
A sidecar mechanism was triggered after KOSPI 200 futures dropped over 5%, temporarily halting programme trading.
Key Point: South Korea led regional losses as markets priced in oil-driven inflation risks.
Oil Surge Sparks Inflation Fears
The US and Israel launched large-scale strikes on Iran over the weekend, prompting Tehran to shut down the Strait of Hormuz — a vital corridor handling about 20% of global oil flows.
Brent crude has surged sharply, taking year-to-date gains to roughly 30%, including nearly a 10% jump after the attacks.
The spike in energy prices is amplifying concerns that:
Inflation across Asia could re-accelerate
Central banks may delay planned rate cuts
Economic growth could slow in net energy-importing nations
Dollar Strengthens, Asian Currencies Under Pressure
The US dollar index climbed to a six-week high on safe-haven demand and expectations that higher inflation could limit the Federal Reserve’s room to ease policy.
Currency moves:
Thai baht -1% Monday, -0.2% Tuesday
Philippine peso -0.9% Monday, -0.2% Tuesday
Taiwan dollar -0.4%
Ringgit, Singapore dollar and yuan steadier
Key Point: Energy-importing currencies faced the most pressure as oil prices surged.
Regional Equity Performance Mixed
While Seoul and Taipei fell sharply, some markets stabilised:
Kuala Lumpur +0.8%
Manila +0.2%
Singapore +0.9%
Tokyo -2%
Afdhal Rahman of OCBC noted that Singapore equities are increasingly viewed as a regional safe haven due to policy stability and currency resilience.
Rate Cut Expectations Under Review
Michael Wan of MUFG said Asian central banks are unlikely to hike rates due to geopolitical risks alone, but oil-driven inflation may delay easing plans.
Markets are watching:
Philippines and Thailand inflation data (Thursday)
South Korea CPI (Friday)
Malaysia central bank meeting (Thursday), widely expected to hold rates steady
Outlook
Asia’s vulnerability lies in its heavy reliance on imported energy. Sustained oil price increases could:
Push inflation higher
Delay monetary easing
Pressure currencies and equities
Overall theme: Oil shock from Middle East conflict is intensifying inflation fears and clouding the outlook for Asian rate cuts.
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