The escalating conflict in Iran continues to wreak havoc across Asian financial markets, with Japan’s Nikkei 225 plunging another 3.5% and Hong Kong’s Hang Seng index shedding 2.5%. South Korea’s KOSPI experienced a dramatic session, registering its largest one-day loss since 2008, at one point dropping by as much as 12%. The turmoil reverberated across global equities, as European stocks, after a 3.5% correction yesterday, looked set to open flat, while U.S. futures indicated losses of less than 1%.
The deepening military engagement has also sparked fresh diplomatic and political rifts. After Spain refused to allow the U.S. to use its bases for operations related to the conflict, Washington has threatened an economic embargo against the European nation. Domestically, prominent political figures from both Republican and Democratic parties in the U.S. are increasingly criticizing the war, questioning its strategic rationale and arguing that no direct threat to the United States was imminent.
Amidst the burgeoning regional tensions, former President Trump announced that the U.S. Navy would be deployed to protect commercial shipping passing through the critical Strait of Hormuz. On the ground, the U.S. claims to have sunk 17 Iranian vessels, while Iran maintains that its more advanced weaponry has not yet been deployed.
In commodity markets, oil prices continued their relentless climb, with Brent crude surging an additional 3% to reach $84 per barrel, fueled by supply disruption fears. Gold, a traditional safe haven, also gained 1%, settling at $5,165 an ounce. The Euro remained stable against the U.S. dollar, trading at 1.16.