As Middle East Tensions Rise, Bonds & Stocks Decline – Asia Market Wrap
Stocks and bonds came under pressure while oil prices surged after renewed Middle East tensions reignited concerns over global energy supplies, complicating the outlook for inflation and interest rates.
Brent crude rose more than 2% to above $76/bbl after the US launched fresh airstrikes on Iran and revoked a waiver allowing Tehran to sell oil globally, following recent attacks on shipping in the Strait of Hormuz. Government bond yields rose across Australia and Japan, while New Zealand’s central bank delivered its expected interest rate increase. Treasuries were little changed.
Asian equities weakened, led by a more than 5% decline in South Korea’s Kospi as investors continued rotating out of crowded semiconductor positions, pushing the index closer to a technical bear market. Broader market losses were more contained, with the MSCI Asia Pacific Index falling 0.6%, S&P 500 futures little changed and Nasdaq 100 futures edging higher after US semiconductor stocks dropped more than 4% on Tuesday.
Geopolitical tensions escalated after US forces struck more than 80 targets in Iran, according to US Central Command. Iran warned it would respond, while reports indicated drones had been launched toward Bahrain and Kuwait said it was responding to missile attacks.
The Dollar was little changed after Tuesday’s gains, while gold climbed above $4,100/oz on increased demand for safe-haven assets. Bitcoin fell around 1.5%.
