Global financial markets sold off sharply as fresh exchanges of fire between the US and Iran rattled investors already worried about rising government borrowing costs. South Korea’s KOSPI index dropped nearly 4%, Japan’s Nikkei fell almost 3%, and European indices slid as the selling spread from Asia. Canadian markets also touched one-month lows during the widespread risk-off mood.
Government bond markets faced renewed pressure, with the US 10-year Treasury yield climbing toward a roughly three-year high and Japan’s long-term bond yield holding above a multi-decade peak. Meanwhile, oil prices pushed higher to about a five-week high due to supply-disruption fears tied to fighting near the Strait of Hormuz.
Analysts called the strikes the most significant escalation since a July flare-up, adding geopolitical risk to existing worries over inflation and government deficits. This combination has left investors nervous about holding both equities and long-duration government debt, while currency traders rotated toward traditional safe havens.