Major Asian stock indexes plummeted on Sunday as investors fled to safe havens amid escalating tensions between the United States and Iran, with Tokyo's Nikkei 225 and Seoul's Kospi both shedding 4 percent in volatile trading.
The selloff, which erased approximately $380 billion in market capitalization across the region, reflects growing anxiety that the month-long military confrontation could trigger a broader economic crisis through supply chain disruptions and an energy price shock.
By midday trading in Tokyo, the Nikkei had fallen 1,520 points to 36,890, while South Korea's Kospi dropped 102 points to 2,448. Hong Kong's Hang Seng declined 3.2 percent, and the Shanghai Composite lost 2.7 percent as mainland China investors absorbed the weekend news of intensified U.S. threats regarding the Strait of Hormuz.
"The risk-off sentiment is pervasive," said Takeshi Yamamoto, chief strategist at Nomura Securities in Tokyo. "Investors are pricing in not just the immediate military risks, but the second-order effects on global trade and inflation."
Oil prices surged in tandem with the equity decline, with Brent crude jumping 6.8 percent to $97.40 per barrel—its highest level since the 2022 energy crisis triggered by Russia's invasion of Ukraine. West Texas Intermediate climbed above $92, breaching a psychologically significant threshold that economists warn could reignite inflationary pressures across developed economies.
The Strait of Hormuz, through which roughly 21 percent of global petroleum passes, has become the focal point of market anxiety. While the waterway remains technically open, insurance premiums for tankers transiting the strait have increased fifteenfold, effectively functioning as a partial blockade.
