Europe Suffers as Iran Tensions Fuel Market Jitters
European shares closed lower on Tuesday amid rising tensions between the US and Iran. The pan-regional Stoxx 600 index dropped by 0.62% to 647, with Germany's DAX down 1.22%, the UK's FTSE 100 falling 0.32%, and France's CAC 40 declining 0.39%.
The escalation of the Iran crisis led to a surge in Brent crude prices, which rose to $92.55 a barrel, up 2.55%. US President Donald Trump warned that the US would 'hit them hard' after Iran attacked two US bases in Jordan.
Global bond yields also reached new highs as inflationary fears and looming rate hikes weighed on investor sentiment. Japan's 10-year yield crossed the 3% barrier, while Germany's 10-year yield is now only 33 basis points higher than Japan's.
The eurozone's inflation rate rose to 3.3% in August, sparking expectations of a rate hike from the European Central Bank. The bank's meeting comes as growth at factories in the eurozone hit its fastest pace in over four years, according to S&P Global's purchasing managers' index.