Mideast Tension Rattles Asian Markets: Investors Brace for Energy Shock

Asian markets fell sharply due to concerns about a potential energy shock from escalating Middle East tensions. Investors pulled out from gold and chipmakers, severely impacting stocks in Seoul and Japan's Nikkei. The geopolitical developments also caused a spike in oil prices and affected global currencies.

On Wednesday, Asian markets experienced significant declines as investors withdrew from gold and chipmaker positions over fears of a broader Middle East conflict leading to an energy shock and heightened inflation. The dramatic selloff in Seoul resulted in a 4% drop, marking over an 11% loss over two days.

Meanwhile, Japan's Nikkei recorded a 2.5% slump amid consecutive sessions of losses. The situation underscores the vulnerability of major energy importers like Japan and South Korea. Brent crude oil futures surged more than 12% this week, despite the slight decline following US President Trump's assurance of an insurance guarantee on Gulf shipping.

Geopolitical tensions intensified as US and Israeli forces targeted Iran, which retaliated with drone and missile attacks on Gulf oil refineries and US embassies. The rising oil prices triggered concerns about enduring inflation and interest rate discussions, impacting global markets and currencies like the euro.

(With inputs from agencies.)