Asian Markets Plunge as US-Iran Tensions Boost Oil Prices and Yields

Asian markets took a hit on Wednesday as tensions between the US and Iran pushed oil prices to a five-week high and drove up government bond yields. The MSCI's broadest index of Asia-Pacific shares outside Japan fell by 2% with South Korea's KOSPI dropping almost 4%. The Nikkei 225 was down 2.9%, while S&P 500 e-mini futures were down 0.1%. Brent crude futures rose 0.9% to $95.45 a barrel after the US launched airstrikes on Iran.

Analysts pointed out that the threat of further disruptions to the Strait of Hormuz has brought anxiety over inflation, driving a selloff in stocks and a rout in global bond markets. The yield on the U.S. 10-year Treasury bond hit an intraday high of 4.8122%, its highest level in almost three years.

The kiwi dollar was down 1% at $0.5834 after the Reserve Bank of New Zealand hiked interest rates by 25 basis points to 2.75%. The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, was up 0.1% at 99.79.