Asian markets tumble as US-Iran fighting lifts oil and bond yields

Asian markets experienced a sharp downturn on Wednesday as the threat of further disruptions in the Strait of Hormuz heightened inflation concerns, causing a surge in global bond yields and prompting a sell-off in stocks. MSCI's broad Asia-Pacific index outside Japan fell by 0.8% at the opening bell, with South Korea's KOSPI dropping 3% and Japan's Nikkei 225 sinking 2.2%.

The U.S. 10-year Treasury bond yield increased by 0.4 basis points to 4.798%, while the US dollar index remained near its highest level in two weeks at 99.67. Westpac analysts noted that the ongoing fear of further Hormuz disruptions has fueled anxiety over potential inflation, leading to significant market sell-offs. Meanwhile, the S&P 500 and Nasdaq Composite faced declines, with government bond yields boosting equities' pressure.

Fed funds futures indicate a 67% probability of a 25-basis-point interest rate increase at the Federal Reserve's upcoming meeting, suggesting that monetary policy tightening may be on the horizon. Gold prices held steady at $4,328.59 an ounce, while bitcoin and ether saw slight declines of 0.2% and 0.3%, respectively.