Asian Shares Plunge On Fears Of Energy Crisis

Asian stocks slumped on Wednesday as soaring oil and gas prices due to escalating Middle East conflict spooked markets and fueled demand for safe-haven assets.
After U.S. and Israeli forces attacked Iran, Tehran retaliated by striking U.S. embassies and threatening regional economies.

Shipping through the Strait of Hormuz was halted, quadrupling tanker costs and causing global air transport chaos.

Gold prices were up more than 1 percent in Asian trade, recovering some of the losses in the previous session even as the dollar index extended gains for a third day running amid escalating geopolitical tensions and reduced expectations for interest rate cuts from the Federal Reserve.

Oil prices continued to rise, with Brent crude contract climbing above $83 a barrel on signs the war in Iran is expanding into a broader regional conflict.

With Iran seemingly intent on continuing its strikes against Gulf targets, regional leaders are mulling whether and how to respond.

China’s Shanghai Composite index fell 0.98 percent to 4,082.47, with oil and shipping stocks leading losses on Hormuz closure fears.

Hong Kong’s Hang Seng index tumbled 2.01 percent to 25,249.48 after the release of mixed Chinese PMI data.

While official data showed a second straight month of contraction in manufacturing PMI, a private survey revealed the strongest PMI in more than five years.

Japanese stocks were hit hard on concerns over surging oil prices and potential supply disruptions. Chip-related stocks led losses, with Tokyo Electron, Advantest and SoftBank Group plummeting 4-7 percent.

The Nikkei average briefly lost over 2,600 points before recovering some lost ground to end the session down 3.61 percent at 54,245.54, extending losses for a third consecutive session. The broader Topix index tumbled 3.67 percent to 3,633.67.

Seoul stocks fell by the most since the global financial crisis while the won slid to a 17-year low as surging crude prices raised concerns about manufacturing costs and export competitiveness.

The Kospi average plunged 12.06 percent to 5,093.54, extending losses for a second consecutive day and recording its largest-ever daily loss, with shipping and semiconductor giants Samsung Electronics and SK Hynix taking the hardest hit.

At one point, the Korea Exchange triggered a circuit breaker, temporarily halting trading.

Australian markets closed at a three-week low as escalating tensions in the Middle East fueled inflation concerns and overshadowed stronger-than-expected domestic GDP data for the fourth quarter.

Data showed the economy grew at an annual rate of 2.6 percent in the December quarter, marking the fastest pace in almost three years.

The benchmark S&P/ASX 200 fell 1.94 percent to 8,901.20, dragged down by gold miners, financials and airline stocks. The broader All Ordinaries index settled 1.94 percent lower at 9,117.10.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 index dropped 0.65 percent to 13,531.12, extending losses for a third straight session as the U.S.-Israeli war against Iran widens.

Overnight, U.S. stocks trimmed early losses but still ended notably lower as Israel and the U.S. pounded Iran and Tehran pressed ahead with retaliatory attacks, raising concerns the Middle East conflict could disrupt global trade and reignite inflationary pressures.

As oil prices surge to their highest levels in over a year, President Trump stressed that the United States would ensure the “free flow of energy to the world” under any circumstances.

The Dow closed 0.8 percent lower at a one-month low after having plummeted by more than 1,200 points to its lowest intraday level in almost three months in intraday trading. The tech-heavy Nasdaq Composite shed 1 percent and the S&P 500 gave up 0.9 percent.