Asian stock markets swung lower on Wednesday after an early advance lost momentum, with heavy selling in South Korea and Japan dragging regional sentiment lower. Trading in South Korea was briefly suspended for around 20 minutes after losses accelerated.
South Korea's Kospi tumbled 7.84%, Japan's Nikkei 225 declined 1.08% and China's Shanghai Composite slipped 0.54%. In contrast, Australia's ASX 200 rose 0.99%, while Hong Kong's Hang Seng Index gained 1.51%.
Markets opened on a firmer footing before sentiment deteriorated through the session, erasing the initial gains. The sharp decline in Korean equities prompted a temporary halt in trading as volatility intensified. Investor sentiment remained cautious after MS NOW, citing a U.S. official, reported that American forces carried out overnight strikes on an Iranian military site believed to pose a threat to U.S. personnel and commercial shipping transiting the Strait of Hormuz. The development renewed concerns that tensions in the Middle East could escalate further.
The abrupt reversal highlighted growing caution among investors, who continue to assess the combined impact of geopolitical tensions, elevated energy prices and uncertainty over the global interest-rate outlook. While Australia and Hong Kong remained in positive territory, losses in Japan and South Korea weighed on the broader regional picture.
Investors are also awaiting the outcome of the U.S. Federal Reserve's policy meeting, looking for clues on the future direction of interest rates. Rising oil prices following renewed tensions in the Middle East have added to concerns that inflation could remain stubborn, complicating the path for central banks.
Overnight, Wall Street ended with mixed performances. The Dow Jones Industrial Average climbed more than 500 points, while the Nasdaq Composite recorded its fifth straight daily decline as continued weakness in semiconductor stocks weighed on technology shares.
Market participants will continue tracking the Fed's policy announcement, developments in the Middle East and volatility across Asian equities to gauge whether Wednesday's sharp reversal signals a broader shift in investor sentiment.
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