Markets in Europe steady after Asian shares swoon over widening Iran war

BANGKOK (AP) — European shares opened higher on Wednesday after another day of sell-offs in Asia, where South Korea’s benchmark plunged more than 12%.

U.S. futures were 0.3% lower.

Oil prices climbed more than 3% as the United States and Israel war with Iran entered its fifth day, with Israel targeting the Iranian leadership and security forces and the Islamic Republic hitting back with missile barrages and drone attacks across the region.

Worries over the war, which U.S. President Donald Trump has suggested could last a month or longer, have hammered world markets, spooking investors who fear more spikes for oil prices may grind down the global economy and sap corporate profits.

“I think the Iran situation is getting out of hand, and I think that U.S. President Donald Trump miscalculated enormously,” said Francis Lun, CEO of Venturesmart Asia. “The situation is very grim.”

Still, sentiment appeared to steady early Wednesday in Europe, where Germany’s DAX edged 0.2% higher to 23,851.86. In Paris, the CAC 40 was nearly unchanged at 8,105.25. Britain’s FTSE 100 edged 0.1% lower to 10,470.00.

In Asia, South Korea’s Kospi led the regional losses as energy security concerns eclipsed optimism over the boost computer chipmakers like Samsung Electronics and SK Hynix have been getting from expanding use of artificial intelligence.

The Kospi sank 12.1% to 5,093.54. Samsung’s shares dropped 11.7%, while SK Hynix gave back 9.6%.

The Korea Exchange temporarily halted trading for the Kospi index, while a circuit breaker was also triggered on the tech-oriented Kosdaq after it fell by more than 8%. It later dropped nearly 14%.

South Korea’s stock market has been one of the world’s best performers this year, but its economy depends heavily on trade and fuel imports, that are threatened with disruptions to traffic through the Strait of Hormuz, the narrow gateway to the Persian Gulf through which roughly a fifth of globally traded oil passes.

Trump announced Tuesday that he had ordered the U.S. Development Finance Corp. to provide political risk insurance and guarantees for financial security of all maritime trade.

“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible,” Trump said in a message posted by the White House on X.

Still, the price of U.S. benchmark crude oil climbed more than 3.5%, to $77.18 per barrel. Brent crude, the international standard, gained 3.7% to $84.38 per barrel. Its price has jumped about 15% since the war began.

“Trump’s assurances of the US underwrite shipping insurance against Middle East conflict risks and even U.S. naval escorts only mitigate, but do not eliminate, enduring upside risks to oil prices,” Mizuho Bank said in a commentary.

The increased insurance costs filtering through to shipping would ultimately cost an extra $5 to $15 a barrel, it said, adding that the “‘war premium’ remains firmly intact.”

In Tokyo, the Nikkei 225 shed 3.6% to 54,245.54. Like South Korea and Taiwan, Japan depends heavily on imports of oil and natural gas from the Persian Gulf.

Elsewhere in Asia, the Hang Seng in Hong Kong fell 2% to 25,249.48 and the Shanghai Composite index shed 1% to 4,082.47.

In Australia, the S&P/ASX 200 declined 1.9% to 8,901.20.

Taiwan’s Taiex lost 4.4% and shares in Bangkok sank 6%.

On Tuesday, the S&P 500 finished with a loss of 0.9% after dropping as much as 2.5% on concerns over the war’s damage to the economy. The Dow Jones Industrial Average pared its loss to 0.8% and the Nasdaq composite fell 1%.

Some analysts say stocks could rebound if the war ends soon. If it drags on, higher inflation partly due to rising energy prices could tie the Federal Reserve’s hands and keep it from cutting interest rates.

For now, one of the most evident impacts on the economy has been a surge in gasoline prices.

While drivers in Europe and some Asian cities waited in line to fill their tanks with fuel, as a net oil exporter the U.S. does not face a shortage. But prices are still influenced by global market trends.

In the U.S., a gallon of regular was selling for $3.11 on average, up 11 cents, according to motor club AAA, surprising some drivers at the pump. Gasoline prices were already rising before the U.S. launched strikes on Iran as refiners were switching over to summer blends of fuel.

In other dealings early Wednesday, the dollar fell to 157.46 Japanese yen from 157.74 yen. The euro slipped to $1.1604 from $1.1612.

The price of gold rose 1.2%, while silver gained 2.6%.

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Associated Press writer Kim Tong-hyung in Seoul, South Korea, contributed.