US-Iran Conflict Sends Asian Stocks into Free Fall
Asian financial markets plummeted on Wednesday as renewed US airstrikes on Iran intensified fears of further disruption to global energy supplies, sending oil prices soaring and pushing bond yields to multi-year highs.
The MSCI's broadest index of Asia Pacific shares outside Japan fell 2%, with South Korea's KOSPI dropping nearly 4% and Japan's Nikkei 225 declining 2.9%. The losses followed a similar trend on Wall Street, where the S&P 500 fell 0.7% and the Nasdaq Composite lost 1%
The sharp increase in oil prices has revived concerns over inflation and the possibility of higher interest rates, triggering a broad selloff across equities and bonds. Brent crude rose 0.9% to around $95.45 a barrel, extending gains after reaching a five-week high following US airstrikes on Iran.
The main concern for markets is the potential for further disruption around the Strait of Hormuz, a critical energy corridor through which a significant share of global oil and liquefied natural gas shipments normally passes. Any prolonged disruption could push energy prices significantly higher and increase costs for businesses and consumers worldwide.