Kospi Plunges 3% on Additional Iran Airstrikes...Oil Prices and Interest Rates Soar, Asia in Panic

▲ Kospi, downturn/AI generated image

The Kospi plunged more than 3% as additional U.S. airstrikes on Iran drove up oil prices and government bond yields.

According to BeInCrypto on September 2 (local time), Asian stock markets collectively weakened in the wake of additional U.S. airstrikes on Iran. The MSCI Asia Pacific Index, excluding Japan, fell 1.5%. The Kospi dropped more than 3%, and the Nikkei 225 index also fell 2.6%.

Rising international oil prices fueled the selling spree. Brent crude rose 1.3% to $95.91 per barrel. The rally, which began after the U.S. launched additional airstrikes on Iran on the 1st, continued, with oil prices at one point soaring to a 5-week high. Concerns about supply disruptions around the Strait of Hormuz also intensified again. Westpac analysts analyzed, "Concerns about further disruptions in the Strait of Hormuz reignited inflation anxieties, leading to a sell-off in major stock markets and global bond markets."

The bond market also suffered a severe shock. The yield on U.S. 10-year Treasury bonds rose to 4.8122% during trading, marking a nearly 3-year high. Japan's 5-year government bond yield also rose to a record high of 2.295%. DBS analysts warned that if bond selling does not stabilize, policymakers might take stronger measures to curb rising interest rates.

Risk assets across the board also faltered. Bitcoin (BTC) fell to $77,000, and Ethereum (ETH) dropped to $2,410.73. Earlier, in the New York stock market, the S&P 500 fell 0.7%, and the Nasdaq Composite Index fell 1%. Following the pressure on Asian tech and semiconductor stocks due to rising interest rates, the selling spread across the broader stock market.

Concerns about interest rate hikes also grew rapidly. According to CME Group's FedWatch, the probability of the Federal Reserve (Fed) raising interest rates at its meeting ending on September 16 was reflected as 67%. This is a significant increase from 39.6% a week ago. The combination of the Iran conflict, rising oil prices, and surging government bond yields put pressure on Asian stock markets, U.S. stock markets, and cryptocurrency markets alike.

[Article Key Summary]

-After additional U.S. airstrikes on Iran, the Kospi fell more than 3%, and the Nikkei 225 index dropped 2.6%.

-Brent crude rose to $95.91 per barrel, and the yield on U.S. 10-year Treasury bonds surged to 4.8122%.

-The probability of a Fed interest rate hike in September jumped from 39.6% to 67% in just one week.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*