Asian equities saw a sharp sell-off on Wednesday, with Kospi leading the fall as escalating war fears and surging oil prices unsettled investors. South Korea’s benchmark Kospi index sank 8. 1%, triggering a halt in trading. The sharp fall happened as worries about energy security outweighed earlier optimism around the AI-driven gains of major tech firms such as Samsung Electronics and SK Hynix.
However, the Korean benchmark did not stop there and proceeded to fall further to 5,159, down a whopping 11% or 631 points. Japan’s Nikkei also traded in red, falling 3.8% to 54,090. Both Japan and South Korea depend heavily on oil and natural gas imports from the Middle East, supplies that are now effectively stranded in the Persian Gulf.
As of 9:10 am, Hong Kong’s HSI was also 2.7% or 700 points down at 25,067. Shanghai and Shenzhen were also 1.2% and 0.6% down, respectively.
The sell-off comes after a weak lead from Wall Street and mirrored broader unease about the expanding conflict with Iran. Investors remain particularly concerned that persistently high oil prices could intensify inflationary pressures, drag on the global economy and dent corporate earnings.
US markets had already reflected the nervous mood. On Tuesday, the S&P 500 closed 0.9% lower after sliding as much as 2.5% during the session on concerns about the war’s economic impact. The Dow Jones Industrial Average ended down 0.8%, while the Nasdaq composite lost 1%.
Market participants are also weighing the potential policy implications in the United States. Higher inflation partly driven by the conflict could limit the Federal Reserve’s ability to cut interest rates. The Fed reduced rates several times last year and has indicated further cuts in 2026, which would typically support growth and employment but could also fuel inflation.
Oil prices continued to climb. US benchmark crude gained 1.2% to $75.46 per barrel, while Brent crude rose 1.5% to $82.61 per barrel. In currency trading, the US dollar was little changed at 157.55 Japanese yen. The euro weakened to $1.1599 from $1.600.
