A look at the day ahead in European and global markets

By Tom Westbrook, Deputy Financial Markets Editor and Wayne Cole, Chief Correspondent, Treasury

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Markets' wartime selloff extended in Asia, with South Korea bearing the brunt of a flight from risk in the face of a potentially prolonged oil shock.

By mid-session the KOSPI - down almost 13% at one point - had ‌shed 8% and two-day losses were the largest since 2009 as panic hit what had been one of the best trades of the year.

3D-printed oil pump jack and barrels in front of a rising stock graph appear in this illustration, taken March 2, 2026. REUTERS/Dado Ruvic/Illustration

Heavy selling also swept through Japan, where the Nikkei was down 3.7% and Taiwan stocks dropped 3.6%. Buyers, in what had been a crowded trade, were few. Thailand led emerging-market losses with a 7.7% slump.

Much of Asia imports its energy through the Strait of Hormuz and faces an ⁠extra hit to energy costs via a stronger dollar.

There had been some relief in markets late in New York on Tuesday when Trump posted he had ordered the U.S. International Development Finance Corporation (DFC) to provide political risk insurance and financial guarantees for tankers in the Gulf and might even use the U.S. Navy to escort shipping.

Graphics are produced by Reuters.

However, the fact the administration had not thought about this and set it up before attacking Iran did not exactly instil confidence. Details were also lacking and analysts saw many problems ahead.

While insurance was provided in the 1987 Iran/Iraq war it took considerable work to get under way and was limited in scope, certainly nothing like the scale needed ‌to ⁠insure the hundreds of tankers moving through the Strait of Hormuz. The vast majority of these tankers are also not U.S.-owned or flagged.

It is also far from clear the DFC has the funds to cover such risks, or the insurance expertise to assess them. Such cover would also likely be challenged in court, as most everything is in the United States.

As for ⁠the U.S. Navy escorting shipping: did anyone ask the Navy first? The strait is narrow and a nightmare to navigate at the best of times, and all with a hostile Iran looming just kilometres to the north. There is a good reason ⁠the already vessel-limited Navy has not gone near the area in any size.

On top of all that, cracks are showing in private credit and fear of AI disruption is swirling around the software sector.

Blackstone's flagship private credit ⁠fund faced a surge in withdrawals in the first quarter, with investors yanking a net $1.7 billion, a filing showed on Monday.

Graphics are produced by Reuters.