By Ronnie Harui and Kwanwoo Jun


Asian equities fell, with South Korean stocks particularly hard hit amid an escalation of the conflict in the Middle East, as Iran ramped up missile and drone attacks in the region and Israel hit targets in Lebanon.

Iran targeted Israel, Saudi Arabia, the United Arab Emirates, Oman and Bahrain, pressing its counterattack after the U.S. and Israel commenced their joint attack on Saturday.

South Korea's benchmark Kospi index tumbled 12% Wednesday, marking a record one-day drop, with the country's shippers hammered by concerns over higher fuel costs as well as restricted shipping through the Strait of Hormuz.

"Broad-based deleveraging and de-risking dominated trade," Pepperstone's Michael Brown said. In markets "where participants were in the mood to 'sell first, ask questions later,' we did see some fairly ugly moves," the senior research strategist added.

Japan's Nikkei Stock Average fell 3.6%, posting its largest one-day decline since April 2025. Taiwan's Taiex lost 4.35%, Hong Kong's Hang Seng Index dropped 2.5% and Singapore's FTSE Straits Times Index fell 2.7%. Thailand's benchmark index was 8.0% lower, with the sharp fall triggering a temporary trading halt by the Stock Exchange of Thailand.

Korea Exchange briefly suspended trading twice to cool volatility following sharp selloffs on both the main Kospi and the smaller tech-heavy Kosdaq markets. Shipping stocks were among the top decliners in Seoul, with Pan Ocean plunging 17%. Index heavyweight Samsung Electronics lost 12%.

"Japan and South Korea are both highly dependent on energy imports, with a significant share of crude oil and [liquefied natural gas] sourced from the Middle East," Ma Tieying, senior economist at DBS Group Research, said in commentary.

Front-month West Texas Intermediate crude oil futures rose 2.3% to $76.26 per barrel and front-month Brent crude oil futures added 2.6% to $83.49 a barrel.

"A sustained increase in energy prices would raise import costs, erode household purchasing power, and increase production expenses for manufacturers," DBS's Ma said. "This combination creates a stagflation-type dilemma for policymakers, as inflation rises while growth slows," she added.

Shares of aluminum producers in Hong Kong climbed as prices of the base metal extended gains after a major Qatari smelter's decision to halt its operations.

Aluminum Corp. of China's shares rose 3.1%, China Hongqiao's stock added 4.1% and Nanshan Aluminium International's shares were 4.4% higher.

Safe-haven assets such as gold and silver also strengthened. Spot gold rose 1.2% to $5,148.49 per troy ounce and spot silver advanced 3.3% to $84.68 an ounce.

Meanwhile, Asian currencies including the Korean won weakened against the dollar as traders pulled away from riskier assets. The greenback was recently up 0.7% at 1,476.20 won in Seoul onshore trading. The U.S. dollar rose 0.4% to 31.77 New Taiwan dollars and gained 0.2% to 16,900.50 Indonesian rupiah.


Write to Ronnie Harui at ronnie.harui@wsj.com


(END) Dow Jones Newswires

03-04-26 0204ET