South Korea’s benchmark KOSPI index plunged 12.06% on Wednesday, marking the steepest single-day fall in the country’s history and surpassing the previous record set after the September 11, 2001 attacks. The index recovered slightly in afternoon trading, closing down around 10% as of 05:00 GMT.

Authorities briefly halted trading by activating a 20-minute circuit breaker after losses passed the 8% threshold. The sharp decline followed a 7.2% drop on Tuesday, creating the worst two-day streak in decades. Losses were broad-based, affecting major corporations such as Samsung Electronics, SK Hynix, and LG Electronics. Shipping and logistics firms were hardest hit, with Pan Ocean, HMM, and KSS Line dropping 16–17%, reflecting disruptions in the Strait of Hormuz, a vital global oil route.

South Korea relies heavily on foreign oil and gas, importing roughly 98% of its fossil fuel needs, making its markets particularly sensitive to geopolitical tensions. The KOSPI had surged more than 40% in the first two months of 2026, making this sudden downturn a sharp reversal amid the US-Israeli war on Iran.

Meanwhile, US markets also retreated slightly, with the S&P 500 and Nasdaq Composite down about 1% overnight, as the conflict continued into its fifth day. Tehran launched retaliatory strikes against Israel and US allies in the Gulf, including Qatar and the United Arab Emirates, while US and Israeli forces maintained air operations over Iran and Lebanon.

The turmoil highlights the widening economic and market impacts of the Middle East conflict, affecting both regional and global equities.