SINGAPORE – Stocks slumped at the start of the Asian trading session on Sept 2 as a bond market-induced panic on global markets spilled over into the region, after renewed attacks by the United States on Iran pushed oil prices higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.8 per cent in early trading as South Korea’s KOSPI dropped 3 per cent on the open and Japan’s Nikkei 225 sank 2.2 per cent. S&P 500 e-mini futures were flat.
Brent crude futures extended gains into a second day as trading resumed in Asia, rising 0.7 per cent to US$95.34 a barrel after the US launched a barrage of airstrikes on Iran on Sept 1, which earlier pushed oil prices to a five-week high.
“The threat of further disruptions to the Strait of Hormuz has brought about renewed anxiety over inflation, driving a selloff in stocks across most major markets and a rout in global bond markets,” Westpac analysts wrote.
The yield on the US 10-year Treasury bond was up 0.4 basis point at 4.798 per cent as the US dollar index, which measures the greenback’s strength against a basket of six currencies, held near the highest levels of the past two weeks at 99.67.
Overnight on Wall Street, the S&P 500 slipped 0.7 per cent and the Nasdaq Composite fell 1 per cent as a surge in government bond yields weighed on equities.
The declines came as data from the Institute for Supply Management released on Sept 1 showed US manufacturing activity moderated in August amid a slowdown in new orders, but remained in expansionary territory.
Traders believe that the US Federal Reserve is likely to lift interest rates at its next meeting in two weeks, though a hike is not certain.
Fed funds futures are pricing an implied 67 per cent probability of a 25-basis-point increase to benchmark borrowing costs at the US central bank’s two-day meeting ending on Sept 16, compared to a 39.6 per cent chance a week ago, according to the CME Group’s FedWatch tool.
Gold was flat at US$4,328.59 an ounce, while bitcoin slipped 0.2 per cent to US$77,246.57 and ether was 0.3 per cent lower at US$2,412.60. REUTERS
