Asian stocks tumbled for a second consecutive day as Middle East tensions sent shockwaves through global markets. The MSCI Asia Pacific Index plunged as much as 2%, extending Monday's 1.7% decline following US and Israeli strikes on Iran and Tehran's retaliatory attacks on neighboring countries.

South Korea's Kospi led the selloff, dropping 4.1% as markets reopened after a holiday. The sharp decline reflects investor anxiety over potential oil price spikes and broader economic fallout from the escalating conflict. Energy markets have already shown volatility, with crude prices reacting to the geopolitical uncertainty.

Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore, warned that the real concern extends beyond Iran itself. The fear is that this conflict could trigger a value-at-risk episode where market correlations break down, potentially spreading contagion across asset classes and geographic regions.