Asian stocks slide for 3rd day as oil continues to climb

Asian stock markets fell sharply for a third straight session on Wednesday, while oil prices continued to climb, as the ongoing conflict involving the United States, Israel and Iran deepened fears of rising inflation and slower global growth.

With joint US-Israeli strikes on Iran entering a fifth day, investors are increasingly concerned that disruptions to crude supplies from the Middle East could drive energy prices significantly higher and undermine expectations of further interest rate cuts.

US President Donald Trump said the US navy would escort oil tankers through the Strait of Hormuz if necessary and announced that Washington would provide insurance support for shipping. The move offered limited relief to markets and helped moderate oil’s rally on Tuesday.

However, Iranian strikes on neighbouring countries and reports that some regional oil fields had been shut down kept pressure on energy markets. Both main oil benchmarks rose about one percent on Wednesday. Since last Friday, West Texas Intermediate has jumped around 12 percent to above $75 per barrel, while Brent crude has gained more than 13 percent to trade above $82. Some analysts have warned prices could exceed $100 if the conflict persists.

Rising oil prices have weighed heavily on Asian equities, particularly in economies dependent on imported energy. Tokyo and Seoul led the declines after reaching record highs earlier this year on the back of the artificial intelligence-driven tech rally.

South Korea’s Kospi index plunged more than eight percent, briefly triggering a trading halt, following a seven percent drop the previous day. Japan’s Nikkei 225 fell nearly four percent. Technology stocks were among the hardest hit, with major chipmakers in Japan and South Korea posting significant losses.

The downturn in Asia followed steep declines in Europe, where London’s FTSE 100 fell 2.8 percent and Frankfurt and Paris each dropped more than three percent, pressured by a surge in natural gas prices to their highest levels since Russia’s invasion of Ukraine.

The prospect of higher energy costs has dampened hopes for further monetary easing. Analysts said central banks such as the US Federal Reserve, the European Central Bank and several Asian counterparts may delay planned interest rate cuts. In contrast, some policymakers in the UK, Latin America and parts of Central Europe could face pressure to raise rates if inflation accelerates.

In currency markets, the dollar strengthened slightly against the yen, while the euro and pound weakened against the US currency. On Wall Street, the Dow Jones Industrial Average closed down 0.8 percent on Tuesday, reflecting continued global market caution.