GLOBAL MARKETS-Asian markets tumble as US-Iran fighting lifts oil and bond yields

Asian stocks slumped on Wednesday after renewed U.S. airstrikes on Iran pushed oil prices to a five-week high and drove the U.S. 10-year Treasury yield to its highest level in almost three ‌years, extending a bond market selloff across global markets. MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 2% as South Korea's KOSPI dropped almost 4%, while the Nikkei 225 was down 2.9%. S&P 500 e-mini futures were down 0.1%.

Brent crude futures extended gains into a second day as trading resumed in Asia, rising 0.9% to $95.45 a barrel after the ‌U.S. launched a barrage of airstrikes on Iran on Tuesday, 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 U.S. 10-year Treasury bond hit an intraday high of 4.8122%, its highest level in almost three years, while the yield on the 10-year Japanese government bond rose 2 basis points to 3.015%, extending its climb after reaching ⁠a three-decade high ​earlier this week. "September kicked off on a ⁠shaky note as developed market government bonds continued to sell off," DBS analysts wrote.

"Brace for a volatile month ahead as high yields cause angst across the asset classes," they said. "If the bond rout ⁠does not get stemmed, policymakers would probably have to resort to more aggressive measures to cap yields." 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%, as expected by markets, though dovish language in the central bank's statement weighed on the currency.

"The RBNZ hiked ⁠rates as expected, but tempered expectations for further tightening," Capital Economics analysts wrote. "The messaging sounded a bit less hawkish than before." The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, ⁠was ​up 0.1% at 99.79, its highest since August 17.

Overnight on Wall Street, the S&P 500 slipped 0.7% and the Nasdaq Composite fell 1% as a surge in government bond yields weighed on equities. The declines came as data from the Institute for Supply Management released on Tuesday showed U.S. manufacturing activity moderated in August amid a ⁠slowdown in new orders, but remained in expansionary territory.

Traders believe the Federal Reserve is likely to raise interest rates at its next meeting in two weeks, though ⁠a hike is not certain. Fed funds futures are ⁠pricing an implied 67% probability of a 25-basis-point increase to benchmark borrowing costs at the U.S. central bank's two-day meeting ending on September 16, compared to a 39.6% chance a week ago, according to the CME Group's FedWatch tool.

Gold was down 0.6% ‌at $4,304.64 an ounce, while bitcoin edged ‌0.1% lower to $77,340.50 and ether was off 0.5% at $2,407.01.