Seoul: South Korean stocks plummeted by 4 percent on Wednesday as escalating tensions between the United States and Iran led to increased crude oil prices, sparking concerns about inflation. The Korean won showed strength against the U.S. dollar.

According to Yonhap News Agency, the Korea Composite Stock Price Index (KOSPI) concluded the session at 6,562.72, marking a decline of 273.08 points, or 3.99 percent, effectively ending a two-day upswing. The drop came after the U.S. executed a fresh series of airstrikes against Iranian targets near the Strait of Hormuz, which resulted in a surge in oil prices and reignited fears of inflation.

The possibility of a rate increase at the Federal Reserve's upcoming meeting this month has also contributed to the downturn. All three major U.S. stock indexes recorded losses, and the benchmark 10-year U.S. Treasury yield reached its highest level since January of the previous year. Trading activity was subdued, with a volume of 321.2 million shares worth 18.6 trillion won (approximately US$13.6 billion), and declining stocks outnumbered advancing ones by 734 to 137.

Foreign and institutional investors sold off a net 1.9 trillion won and 2 trillion won in shares, respectively, while individual investors acquired a net 2.3 trillion won. "The KOSPI went bearish as investor sentiment was dragged down by rising oil prices and sovereign debt yields in major economies," commented Lee Kyung-min, an analyst from Daishin Securities.

Notably, market leader Samsung Electronics saw its shares fall by 4.02 percent to 250,500 won, while SK hynix experienced a 4.73 percent decline to 1.61 million won. Hyundai Motor, the top carmaker, saw its stock decrease by 5.62 percent to 378,000 won, with its affiliate Kia dropping by 5.18 percent to 124,400 won.

Battery manufacturers also faced setbacks, as LG Energy Solution's shares fell by 5.31 percent to 347,500 won, and POSCO Future M's shares plunged 8 percent to 176,000 won. Internet giants Naver and Kakao also experienced declines, with Naver's shares decreasing by 2.79 percent to 209,000 won, and Kakao's shares falling by 3.84 percent to 35,100 won.

The Korean won was quoted at 1,368.7 won per U.S. dollar, reflecting an increase of 1.7 won from the previous trading session.