Asian Stocks Slide as US-Iran Tensions Push Oil Higher, Bond Yields Rise
Asian markets fell sharply on Wednesday as US-Iran tensions lifted oil prices and bond yields, stoking inflation fears and a global equity selloff.
Asian equities opened sharply lower on Wednesday, extending a global selloff driven by renewed US airstrikes on Iran that pushed oil prices higher and stoked inflation concerns. The escalation in the Middle East has reignited fears of supply disruptions through the Strait of Hormuz, a critical chokepoint for global crude shipments.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8% in early trading. South Korea's KOSPI dropped 3% at the open, while Japan's Nikkei 225 sank 2.2%. US futures were flat, suggesting a tentative pause on Wall Street after Tuesday's losses.
Brent crude futures rose 0.7% to $95.34 a barrel, extending gains into a second day after the US launched a barrage of airstrikes on Tuesday, which had earlier pushed oil to a five-week high. Analysts noted that the threat of further disruptions to the Strait of Hormuz has brought renewed anxiety over inflation, driving a selloff in stocks across most major markets and a rout in global bond markets.
The yield on the US 10-year Treasury rose 0.4 basis point to 4.798%, while the dollar index held near two-week highs at 99.67. Overnight, the S&P 500 slipped 0.7% and the Nasdaq Composite fell 1% as the surge in government bond yields weighed on equities.
Adding to the cautious mood, data released on Tuesday showed US manufacturing activity moderated in August amid a slowdown in new orders, though it remained in expansionary territory. Traders now see a 67% implied probability of a 25-basis-point rate hike at the Federal Reserve's meeting ending September 16, up from a 39.6% chance a week ago, according to the CME Group's FedWatch tool.
Gold was flat at $4,328.59 an ounce. Bitcoin slipped 0.2% to $77,246.57, and ether was 0.3% lower at $2,412.60.