Global stock indices and U.S. equity futures plummeted on Monday as oil prices surged toward $120 per barrel, driven by the escalating conflict in the Middle East. South Korea’s KOSPI plunged 6%, while Taiwan’s benchmark slumped 4.4%. European equities hit a two-month low as the prospect of "sticky" inflation intensified. France’s CAC 40 and the UK’s FTSE 100 saw declines of 2.7% and 1.9%, respectively. Banking and technology sectors led the downward trend in Europe, falling over 3%. The contagion spread rapidly across Asian markets, where Japan’s Nikkei 225 dived 5.2% to close at 52,728.72 points—its lowest level since early February. Conversely, defense firm Leonardo and energy stocks saw marginal gains as investors pivoted toward security and resource hedges. THE JAPANESE SEMICONDUCTOR CRASH The sell-off was most pronounced in Tokyo’s tech sector, where semiconductor giants Advantest and Tokyo Electron lost 11.03% and 6.87%, respectively. "All 33 sub-indices on the Tokyo Stock Exchange ended in negative territory, with non-ferrous metals emerging as the worst-performing sector, down 8.38%." The sharp rise in energy costs has cast a long shadow over global economies, particularly those heavily reliant on crude oil and gas imports. In the United States, futures for the S&P 500, Nasdaq, and Dow Jones Industrial Average all retreated by more than 1.5%. "The market is starting to take the Middle East conflict seriously," said Hitoshi Asaoka, senior strategist at Asset Management One. Airline stocks, including Lufthansa and Air France-KLM, dropped between 3.9% and 5.2% due to rising fuel costs. The pan-European STOXX 600 index fell 2.34% to 585.08 points, marking its third consecutive day of losses. Analysts noted that the market is now fully pricing in the risks of a prolonged Middle East conflict. "The Nikkei's decline at this pace is justified if the conflict is prolonged."
