Stocks plunge amid inflationary pressure from oil prices

Brent crude surged 27% to $117.58 a ‌barrel, the biggest daily gain since at least 1988, which came on top of a 28% rise last week

Share markets plunged in Asia on Monday as the inflationary pressure from surging oil prices threatened to ​raise living costs and interest rates across the globe, while investors desperate for liquidity rushed to the U.S. dollar.

Brent crude surged 27% to $117.58 a ‌barrel, the biggest daily gain since at least 1988, which came on top of a 28% rise last week.

With no sign of an end to hostilities in the Middle East and tankers still not daring to cross the Strait ​of Hormuz, investors were bracing for a long stretch of higher energy costs.

Faced with the worst oil supply shock since the 1970s, ⁠all eyes will be on Washington’s response, said Helima Croft, head of global commodity strategy at RBC Capital Markets. With no clear definition of what winning looks like, it is hard ​to forecast whether this will be a multi-week or multi-month conflict.

To date, neither White House policy prescriptions nor upbeat television soundbites have alleviated acute market anxiety about the shipping standstill ​and cascading shut-ins across the region, she added.

The news was sobering for Japan, a major importer of oil and gas, knocking the Nikkei down 7.0% on top of a 5.5% decline last week.

South Korea’s market dropped 8.2%, having already declined more than 10% last week.

China is another big oil importer, though it also has a huge stockpile of crude; its blue-chip index shed 1.7%.

China ​on Monday said inflation had already picked up in February ahead of the current oil spike, with consumer prices rising 1.3% on the year. This is not necessarily a negative development, ​given the country has long struggled with disinflation.

Nervous investors sought the liquidity of dollars while shunning currencies from countries that are net energy importers, including Japan and much of Europe.