Key facts
- Asian stocks slumped as renewed U.S. airstrikes on Iran boosted oil prices and heightened inflation concerns.
- The MSCI Asia-Pacific index fell 0.8%, with South Korea's KOSPI down 3% and Japan's Nikkei 225 down 2.2%.
- Brent crude futures rose to $95.34 a barrel amid fears of disruptions to the Strait of Hormuz.
- The U.S. 10-year Treasury yield edged up to 4.798%, while the U.S. dollar index held near a two-week high.
- U.S. stocks closed lower overnight, with the S&P 500 down 0.7% and the Nasdaq Composite down 1%.
Asian stocks slumped at the start of the trading session on Wednesday as a bond market-induced panic spilled over into the region, following renewed U.S. attacks on Iran that pushed oil prices higher. The MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.8% in early trading, with South Korea's KOSPI dropping 3% and Japan's Nikkei 225 sinking 2.2%. S&P 500 e-mini futures were flat.
Brent crude futures extended gains into a second day, rising 0.7% to $95.34 a barrel after the U.S. launched airstrikes on Iran, which had earlier pushed oil prices to a five-week high. Analysts at Westpac noted that the threat of further disruptions to the Strait of Hormuz has brought renewed anxiety over inflation, driving a sell-off in stocks and a rout in global bond markets.
The yield on the U.S. 10-year Treasury bond was up 0.4 basis point at 4.798%, while the U.S. dollar index held near the highest levels of the past two weeks at 99.67. Overnight on Wall Street, the S&P 500 slipped 0.7% and the Nasdaq Composite fell 1% as a surge in government bond yields weighed on equities. Data from the Institute for Supply Management showed U.S. manufacturing activity moderated in August but remained in expansionary territory. Traders believe the Federal Reserve is likely to lift interest rates at its next meeting, with Fed funds futures pricing a 67% probability of a 25-basis-point increase.