South Korea, Japan stocks slide as Asian equities fall amid oil gains, Fed rate hike bets

Asian equities struggled on Wednesday as oil prices held firm and traders priced in higher odds of a September rate hike across the globe. The MSCI Asia Pacific equities index declined 1.7 per cent, with more stocks falling than rising. Japan's Nikkei 225 and Topix fell 2.6 per cent and 2.2 per cent, respectively, while South Korea's Kospi dropped at least 2.8 per cent.

Other noteworthy declines included Australia's S&P/ASX 200, Hong Kong's Hang Seng, and Shanghai Composite. Brent crude oil rose 2 per cent to around US$96.50 a barrel, fueled by heightened tensions between the US and Iran, which could disrupt oil exports through the Strait of Hormuz. Rising oil prices pressured bonds, driving yields to their highest since 2008, as investors increased bets on a US Federal Reserve rate hike.

Global yields rose to levels last seen in late 2023. Treasury 10-year yields climbed to 4.81 per cent, the highest since July 2023. Global investors are concerned about rising yields and their impact on Asian equities, particularly longer-duration tech stocks. Despite the volatility, some analysts maintain a constructive view on Asian markets, citing solid underlying earnings, but note that beta markets are experiencing wild swings.