Middle East Tensions Jolt Asian Markets: Tokyo and Seoul Stocks Plunge With Kospi Shedding 4%

In the Japanese market, pharmaceutical and automotive stocks slumped; as of press time, Sumitomo Pharma plunged over 16%, while Toyota Motor fell nearly 6%.

 

The Australian benchmark S&P/ASX 200 opened down 0.57%, with losses widening to over 1% by press time, reversing a slight gain from the previous day.

 

Overnight, U.S. markets experienced intense volatility before finishing largely flat. Hit by the geopolitical shock at the open, indices gapped sharply lower—the Nasdaq plummeted as much as 1.6% and the Dow dropped nearly 600 points—before repeated bouts of "buy-the-dip" activity fueled a recovery.

 

By the close, the three major indices were mixed: the Dow fell 73.14 points (0.15%) to 48,904.78; the Nasdaq rose 80.65 points (0.36%) to 22,748.86; and the S&P 500 edged up 2.74 points (0.04%) to 6,881.62.

 

On the news front, late on March 2 local time, an advisor to the Commander of the IRGC stated that the Strait of Hormuz has been closed and that Iran will strike any vessel attempting to transit the waterway. An official statement from the IRGC has yet to be released. According to data from Kpler, daily crude oil shipments through the Strait averaged over 14 million barrels last year, accounting for nearly one-third of global maritime crude exports.

 

JPMorgan economists believe the impact of the Iran conflict on the global economy depends primarily on the duration of hostilities, with rising oil prices identified as the most likely channel for significant ripple effects.

 

The bank’s report noted that if the conflict is brief, oil prices may quickly return to their previous trajectory, limiting the global economic shock. Conversely, if oil prices remain elevated through the first half of 2026, the energy price shock could shave 0.6 percentage points off annualized global GDP growth and push global consumer inflation up by more than 1 percentage point during the same period.

 

During Tuesday's Asian trading session, international oil prices continued their ascent. As of press time, both U.S. and Brent crude futures rose over 1%. On Monday, WTI crude settled at $71.23 (up 6.3%), while Brent crude settled at $77.74 (up 6.7%).

 

The surge in oil prices has prompted traders to dial back bets on Fed rate cuts this year. Swap traders are now pricing in 56 basis points of easing for 2026, down from 60 basis points as of last Friday.