South Korea’s benchmark stock index, the KOSPI, plunged as much as 6.5 percent in afternoon trading Tuesday, leading a broad sell-off across Asia Pacific markets as the conflict between the United States, Israel, and Iran entered its fourth day.
The KOSPI’s decline marked the steepest drop since November 5, according to Bloomberg News, as markets reopened following a public holiday. Japan’s Nikkei 225 fell 3 percent, while Australia’s ASX 200 dropped approximately 1.5 percent. In mainland China, the SSE Composite Index initially fell 1.3 percent before partially recovering.
The downturn followed a session on Wall Street where stocks largely held firm despite escalating tensions in the Middle East. The S&P 500 closed flat on Monday, and the Nasdaq Composite edged up 0.36 percent. But, airline stocks experienced declines, mirroring a trend seen in Asia.
Airlines bore a significant portion of the losses, impacted by widespread flight cancellations to the Middle East amid the conflict. Korean Air shares plummeted more than 9 percent, and Japan Airlines saw a decline of about 6 percent. The disruptions come as Iran has threatened to close the Strait of Hormuz, a critical waterway for global oil transport, raising concerns about energy prices.
The sell-off across the Asia Pacific region occurred after US and Israeli attacks on Iranian targets continued, alongside Iranian strikes against US allies in the region. The conflict’s economic risks, including the potential for surging energy prices, are weighing heavily on investor sentiment. According to CNBC, oil prices extended gains following the latest developments.
The KOSPI, previously the best-performing index this year, experienced the most substantial losses among its regional peers. The market’s reaction reflects growing anxieties about the potential for a wider conflict and its impact on the global economy. Al Jazeera reported that Asian stocks racked up steep losses after Wall Street’s initial muted response to the escalating situation.
As of Tuesday afternoon, there has been no official comment from South Korean government officials regarding the market volatility. The US State Department has not issued any statements regarding the market impact of the ongoing conflict.
