The primary catalyst for the global retreat appears to be the deteriorating security situation in the Middle East. The Iran-backed Houthis conducted further drone strikes on Saudi airports and the Aramco Shaybah oil field, while Iran used four drones to strike ships transiting the Strait of Hormuz in the last day. The United States ordered the evacuation of non-emergency personnel from its embassy in Riyadh. Washington and Israel are reportedly planning a major restart of combat operations against Iran after the US midterm elections.
The impact on energy markets was immediate, with Brent crude rising to $112 per barrel. High oil prices are particularly damaging for Asian importers. The Wall Street Journal reported that the supply of oil to China from Iran's 'shadow fleet', which had maintained operations at sea, has been exhausted. China's CSI 300 index fell 1.84%, leaving it 15% lower year to date. Other major Asian markets saw steeper drops: South Korea's KOSPI fell 3.52%, Japan's Nikkei 225 declined 2.65%, and India's Nifty 50 shed 0.82%.
In corporate news, Tesla fell 5.35% in after-hours trading following its Q3 earnings call. The company cut its 2026 capital expenditure guidance from $25 billion to $20 billion. 'So that raised questions about the speed of its transition into AI and robotics, while current revenue and earnings were close to expectations,' Deutsche Bank analyst Jim Reid noted.
European markets were also deeply affected. The Stoxx 600 fell 0.92% in early trading, and the UK's FTSE 100 was down 0.46% before lunch. The yield on France's 10 year bonds hit 5.1%, a level not seen since 2002, signaling deep market skepticism that France has resolved its fiscal crisis. In the digital asset space, Bitcoin declined to $81,922.