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Stocks tumble as Iran war and oil spike roil markets

Equity markets across Asia, Europe and the US came under heavy pressure midweek as the escalating conflict involving Iran drove oil prices sharply higher and stoked fears of renewed inflation. South Korea’s Kospi led losses among major stock markets. Oil prices continued to surge as traffic through the Strait of Hormuz was severely disrupted, reinforcing worries that a prolonged conflict and elevated energy costs could complicate the outlook for central banks. Gold prices bounced back 1% on Wednesday after spot prices had slumped about 4.5% a day earlier, as investors weighed safe-haven demand against the drag from a stronger US dollar and higher Treasury yields. The US Dollar Index climbed to a six-week high on Tuesday before stabilising midweek.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Negative market data
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South Korea’s Kospi index slumped more than 12% on Wednesday, prompting a temporary trading halt on the tech-heavy Kosdaq, which was down about 13%. The sell-off, driven by the escalating conflict involving Iran and surging oil prices, hit heavyweight chipmakers particularly hard, with Samsung Electronics and SK Hynix dropping more than 9% and over 6% respectively. Other markets in the Asia-Pacific region were also under heavy pressure on Wednesday.  Japan’s Nikkei 225 was down 3.7% and Australia’s S&P/ASX 200 was 1.9% weaker. Hong Kong’s Hang Seng Index was trading 2.5% lower and mainland China’s CSI 300 was down 1.1% after China’s official manufacturing purchasing managers index (PMI) fell to 49 in February, down from 49.3 in January and matching weak levels last seen in October and April 2025.

Oil prices surge as Hormuz traffic halts

Oil prices climbed further on Wednesday as the conflict involving Iran severely disrupted traffic through the Strait of Hormuz, with Brent crude rising above USD 83 per barrel after gaining about 12% over the previous two days and West Texas Intermediate trading above USD 76. The escalation comes despite a plan announced on Tuesday by US President Donald Trump for the US International Development Finance Corporation to provide insurance for tankers and for the US Navy to escort vessels “if necessary”, a move that has so far failed to calm markets.

US stocks fall amid Middle East tensions

US equities declined on Tuesday as the conflict between Israel, the US and Iran unsettled markets, although key indices recovered part of their earlier sharp losses after the US signalled plans to protect oil shipments near Iran. The Dow Jones Industrial Average closed 0.8% lower at 48,501.27 points after having been down as much as 2.6% intraday, while the S&P 500 and the technology-heavy Nasdaq 100 fell 0.9% and 1.1% respectively, as investors focused on the risk of higher inflation stemming from elevated oil and gas prices. Mining stocks were hit particularly hard as falling gold and silver prices and expectations of higher-for-longer US interest rates dragged down mining shares.

Euro-area inflation edges higher in February

Euro-area consumer price inflation accelerated in February to 1.9% year-on-year, up from 1.7% in January and slightly above market expectations, according to data released on Tuesday. Core inflation, which excludes food and energy, rose to 2.4% from 2.2%. The data come after the European Central Bank left interest rates unchanged at its first policy meeting of the year in early February, reiterating that inflation should converge to its 2% target over time. ECB officials have stressed that policy must remain flexible as the Iran conflict risks pushing up energy prices, complicating the euro area’s already fragile growth outlook. European equity markets suffered steep losses on Tuesday as the war in the Middle East rattled investors and pushed oil prices higher. The Euro Stoxx 50 slid 3.6%, while Germany’s DAX fell 3.4% and France’s CAC 40 dropped 3.5%; the Swiss Market Index also declined by 3.1%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Adidas, Bayer, Broadcom, and Continental.

Economic data in focus: Services Purchasing Managers’ Indices from some of the world’s largest economies, including Germany (09:55), France (09:50), euro area (10:00), UK (10:30), US S&P Global (15:45) and US ISM (16:00); Swiss Consumer Price Index (08:30), euro-area unemployment rate (11:00), US ADP National Employment Report (14:15) and US Fed Beige Book (20:00).

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Editor: Alessandro Fezzi
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