Asian stocks saw a sharp sell-off on Wednesday, with the Cospi leading the decline as rising war fears and rising oil prices unsettled investors. South Korea’s benchmark Kospi index fell 8.1%, triggering a trading halt.
The sharp decline occurred as concerns about energy security overshadowed earlier optimism about AI-led gains for major technology companies such as Samsung Electronics and SK Hynix.However, the Korean index did not stop there and continued to fall to 5159, a massive decline of 11% or 631 points. Japan’s Nikkei also traded in the red, down 3.8% to 54,090. Both Japan and South Korea rely 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 a.m., the HSI was also down 2.7%, or 700 points, to 25,067. Shanghai and Shenzhen shares also fell by 1.2% and 0.6%, respectively. The selling came after a weak advance from Wall Street and reflected broader concern about the expanding conflict with Iran. Investors remain particularly concerned that continued high oil prices may intensify inflationary pressures, weigh on the global economy and impact corporate profits.
US markets have already reflected the tense mood. On Tuesday, the S&P 500 closed 0.9% lower after falling as much as 2.5% during the session on concerns about the economic impact of the war. The Dow Jones Industrial Average closed down 0.8%, while the Nasdaq Composite lost 1%. Market participants are also weighing potential political ramifications in the United States. High inflation driven in part by the conflict may limit the Federal Reserve’s ability to cut interest rates.
The Fed cut interest rates several times last year and has signaled further cuts in 2026, which would typically support growth and employment but could also lead to higher inflation. Oil prices continued to rise. Standard US crude gained 1.2% to $75.46 per barrel, while Brent crude rose 1.5% to $82.61 per barrel. In currency trading, there was little change in the US dollar at 157.55 Japanese yen. The euro fell to $1.1599 from $1.600.