Asia Markets Dive as Iran Attack Sparks Risk-Off Surge; Oil Jumps 8%

Global markets in Asia reacted sharply to a confirmed Iranian military operation targeting regional infrastructure on March 2, 2026, sending equities into steep decline. Major indices across the region posted losses, with Japan’s Nikkei 225 falling 3.7%, South Korea’s KOSPI dropping 4.1%, and Australia’s S&P/ASX 200 shedding 3.3%. The sell-off was driven by immediate fears of escalating regional conflict and potential disruptions to energy flows. The energy sector bore the brunt of the reaction, with crude oil futures (CL=F) surging 8.2% to $94.60 per barrel, the highest level since early 2024. The jump was fueled by concerns over potential supply disruptions in the Strait of Hormuz and increased military activity in the Persian Gulf. Analysts noted that even a temporary halt in shipping lanes could trigger a supply crunch, given tight global inventories. Volatility measures reflected the growing unease, as the CBOE Volatility Index (^VIX) spiked 28% to 26.7, signaling heightened investor anxiety. U.S. equity futures on the S&P 500 (SPX) declined 2.4% in pre-market trading, indicating that the risk-off sentiment had spread globally. Safe-haven assets such as gold and Japanese yen saw strong demand, with gold rising 2.6% and the yen strengthening 1.8% against the dollar. Defense-related stocks in the U.S. and Europe also saw early gains, with Lockheed Martin and Raytheon Technologies up 5.3% and 4.7% respectively, as investors priced in potential defense spending increases. The geopolitical escalation has prompted central banks and financial regulators across Asia to monitor market stability closely, with several issuing statements emphasizing liquidity readiness.