Stocks fell and oil prices surged on Thursday after a major escalation in the U.S.-Israel war with Iran rattled investors. The yen wobbled near the crucial 160 per dollar level as Japan's central bank left interest rates unchanged.
The Bank of Japan kept its short-term policy rate at 0.75% but adopted a cautious tone on inflation risks from rising energy costs. The yen was last at 159.61 against the dollar, with Japanese officials signaling readiness to act if needed.
The conflict has intensified, with Iran accusing Israel of attacking its facilities and vowing retaliation. Energy prices rose sharply, with U.S. crude futures up 1%, natural gas up over 6%, and Brent crude hitting $112.19.
Japan's Nikkei dropped 2.5%, while South Korean equities fell 1.5%. European futures were down more than 1%.
Aftermath of an Israeli-US strike on a police station in Tehran, Iran, Mar 2, 2026.