- Markets are shaken by the Iran war, affecting energy and stock market stability globally.
- On Wednesday, Asian stocks fell sharply.
- Crude oil prices are rising on Hormuz Strait disruptions, increasing geopolitical tensions, and market risks.
Global markets plunged on Wednesday as fears over the fallout from the war in Iran spooked investors for the third day.
The jitters contrast against how markets held up after US strikes on Venezuela and the Greenland crisis earlier this year — events that showed how geopolitical events don't usually cause a sustained market reaction.
"But the exception is when the geopolitical event has a macro channel to affect markets, and events in Iran are a prime example of that," wrote Henry Allen, a macro strategist at Deutsche Bank, in a Tuesday note.
Stocks
Stock markets in Asia were sharply lower on Wednesday morning. The region is heavily reliant on Middle East energy imports, making it vulnerable to an energy shock.
South Korea's Kospi plunged 8%, extending sharp declines for a second straight day in a reversal for a market that has been in an AI-buoyed rally.
Japan's Nikkei 225 fell as much as 3.9% and Hong Kong's Hang Seng dipped over 2%.
Both South Korea and Japan are among the world's top importers of liquefied natural gas, whose shipments are affected by the disruptions in the critical Strait of Hormuz.
On Monday, Qatar's state-owned energy company halted liquefied natural gas production after reported damage to facilities. The Middle Eastern country is among the world's largest LNG exporters.
US stock futures were lower around 9:30 p.m. ET on Tuesday:
S&P 500 futures: 6,794.25, down 0.5%
Dow futures: 48,363.00, down 0.4% (- 185 points)
Nasdaq futures: 24,611.50, down 0.6%
Energy
Crude oil futures are higher because of shipping disruptions in the Strait of Hormuz, where one-fifth of the world's oil shipments pass through.
International Brent crude oil futures and US West Texas Intermediate crude oil futures were both trading higher, around $82 per barrel and $75 per barrel, respectively.
Both grades are over 30% higher so far this year amid sharply heightened geopolitical risks.
Shipping has been disrupted in the Strait of Hormuz, a critical chokepoint for energy shipping.
Crossings in the Strait have been "severely suppressed" amid the conflict, according to maritime data platform Windward.
On Monday, a total of seven vessel crossings were recorded, representing a 61% decrease from a day ago and dramatically below the 7-day average of 79 crossings.
Gold
Prices of gold, a haven asset, were holding up, gaining 1.8% to around $5,178 per troy ounce at 9:05 p.m. ET on Tuesday.
The yellow metal dropped as much as 4% on Tuesday.
The post Stocks slide, oil climbs on fears of an energy shock from the Iran conflict appeared first on Business Insider
