Global markets extend losses on Tuesday

Global markets extended losses on Tuesday as investors weighed the fallout from US and Israeli strikes on Iran, lifting the dollar and energy prices while deepening a selloff in equities.

MSCI’s broadest Asia-Pacific index outside Japan fell 2.9 per cent for a second straight session, led by a 7.2 per cent plunge in South Korea’s benchmark. Japan’s Nikkei 225 dropped 3.1 per cent, while S&P 500 futures slid 0.9 per cent. On Wall Street, the S&P 500 ended flat after a volatile session and the Nasdaq Composite rose 0.4 per cent.

Investor sentiment deteriorated after an Iranian Revolutionary Guards official said the Strait of Hormuz was closed to marine traffic, threatening a key oil route. Supertanker rates from the Middle East to China surged above $400,000 a day, while Brent crude rose 2.3 per cent to $79.50 a barrel. European and Asian LNG benchmark prices jumped about 40 per cent on Monday.

Analysts warned that higher energy costs could erode Asian corporate earnings and add to inflation pressures globally. Goldman Sachs estimated a 20 per cent rise in Brent could cut regional earnings by 2 per cent, depending on the conflict’s duration.

The US dollar index hovered near a six-week high at 98.73, reflecting safe-haven demand, while the 10-year US Treasury yield edged up to 4.059 per cent. Markets largely expect the Federal Reserve to keep interest rates unchanged at its March meeting.

Gold slipped 0.4 per cent, while bitcoin and ether fell more than 2 per cent. European futures also declined, with Germany’s DAX and pan-regional contracts pointing lower, signalling continued risk aversion across global markets.

Attribution: Reuters