Markets in Europe gain while Asian shares swoon as war with Iran widens, oil surges

European shares opened higher on Wednesday after another day of sell-offs in Asia, where South Korea’s benchmark plunged more than 12 per cent. US futures were 0.3 per cent lower.

Oil prices climbed more than 3 per cent as the United States and Israel’s 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 US 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 US 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 per cent higher to 23,851.86. In Paris, the CAC 40 was nearly unchanged at 8,105.25. Britain’s FTSE 100 edged 0.1 per cent 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 per cent to 5,093.54. Samsung’s shares dropped 11.7 per cent, while SK Hynix gave back 9.6 per cent. 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 per cent. It later dropped nearly 14 per cent.

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, which 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 US Development Finance Corp. to provide political risk insurance and guarantees for the financial security of all maritime trade.