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

Asian markets experienced a sharp decline at the beginning of the trading day on Wednesday due to increased tensions between the United States and Iran, which led to higher oil prices and a surge in bond yields. The MSCI's Asia-Pacific index, excluding Japan, fell by 0.8%, while South Korea's KOSPI dropped 3% and Japan's Nikkei 225 declined by 2.2%.

S&P 500 e-mini futures remained unchanged, while Brent crude futures continued their upward trend, rising by 0.7% to $95.34 a barrel following the US airstrikes on Iran on Tuesday. In response to the situation, Westpac analysts reported a selloff in stocks across major markets and a rout in global bond markets. The US 10-year Treasury bond yield increased by 0.4 basis points to 4.798%, and the US dollar index held near its highest level in two weeks at 99.67.

On Wall Street, the S&P 500 fell by 0.7% and the Nasdaq Composite dropped by 1%. The latest data from the Institute for Supply Management indicated that US manufacturing activity slowed in August, although it remained in expansionary territory. Traders anticipate that the Federal Reserve will likely raise interest rates during its upcoming meeting, though an increase is not guaranteed.

Fed funds futures indicate a 67% probability of a 25-basis-point rate hike during the Federal Reserve's two-day meeting on September 16, compared to a 39.6% chance a week ago. Gold prices remained steady at $4,328.59 an ounce, while Bitcoin decreased by 0.2% to $77,246.57, and Ether fell by 0.3% to $2,412.60.