BEIJING (dpa-AFX) - Asian stocks nosedived on Thursday as rising oil prices following attacks on key energy infrastructure in the Middle East rekindled concerns about inflation, interest rates and the regional growth outlook.
Brent crude price spiked more than 6 percent above $114 a barrel after Israel attacked upstream energy assets in Iran and the latter vowed retaliation, escalating attacks on Gulf energy infrastructure.
Missile strikes damaged Qatar's Ras Laffan hub, disrupting LNG and helium supply.
Washington 'knew nothing' of Israel's earlier attack on Iran's South Pars gas field, President Trump said and vowed that 'NO MORE ATTACKS WILL BE MADE BY ISRAEL' if Tehran stops attacking Qatar.
But if Iran did not comply, the United States would 'massively blow up the entirety of the South Pars Gas Field', Trump warned.
The dollar strengthened against other major currencies amid heightened tensions in the Middle East and fading expectations for Federal Reserve rate cuts this year.
Gold extended losses and was down over 1 percent at $4,752 on ounce, after having hit a one-month low in the previous session on hawkish Fed comments.
China's Shanghai Composite index dropped 1.39 percent to 4,006.55 to hit a six-week low as geopolitical tensions intensify. Hong Kong's Hang Seng index fell 2.02 percent to 25,500.58.
Japanese markets lost ground as the Bank of Japan kept its rates steady at 0.75 percent, as expected, but warned that future developments in the Middle East 'warrant attention.'
Speaking on the outlook, BoJ Governor said at a press conference that the pace of inflation increase will face upward pressure from higher oil prices and that he cannot say how long it would take to judge whether energy supply shocks affect underlying prices.
Meanwhile, finance minister Satsuki Katayama signaled readiness to take 'take necessary action at any time against market volatility.'
The Nikkei average plunged 3.38 percent to 53,372.53 while the broader Topix index closed 2.91 percent lower at 3,609.40.
Seoul stocks tumbled, with the Kospi average falling 2.73 percent to 5,763.22, reflecting investor fears over rising energy costs and potential economic slowdown. Samsung Electronics, SK Hynix and Hyundai Motor all fell around 4 percent.
Australian markets fell sharply to reach a four-month low on the back of mixed jobs data and inflation concern stemming from the West Asia conflict. The benchmark S&P/ASX 200 fell 1.65 percent to 8,497.80, with miners and gold stocks leading losses. The broader All Ordinaries index slumped 1.77 percent to 8,690.70.
Woodside Energy Group shares soared 7.2 percent to hit a more than two-year high as Brent crude prices climbed above $112 a barrel due to escalating attacks on Middle East energy infrastructure.
New Zealand's benchmark S&P/NZX-50 index tumbled 1.98 percent to 13,051.61, hitting a one-month low amid broad-based selling pressure as data showed the economy expanded 0.2 percent on quarter in Q4 2025, slowing from a 0.9 percent rise in Q3 and falling below expectations for 0.4 percent growth.
U.S. stocks tumbled overnight while Treasury yields jumped as oil prices remained elevated, Fed Chair Jerome Powell struck a more hawkish tone on inflation and data showed inflation at the U.S. wholesale level unexpectedly accelerated last month to 3.4 percent.
After leaving interest rates unchanged, Powell said in his post-meeting press conference that the U.S. is seeing 'some progress on inflation' but 'not as much as we had hoped.'
Fed officials' latest projections predicted a quarter point rate cut this year, but Powell warned that 'you won't see the rate cut' if there isn't further progress on inflation because of the broader uncertainty linked to the Middle East conflict and President Trump's tariffs.
While the tech-heavy Nasdaq slumped 1.5 percent, the Dow plunged 1.6 percent and the S&P 500 plummeted 1.4 percent to reach near four-month lows.
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