World stocks fell yesterday as fresh US air strikes on Iran pushed oil prices to five-week highs, stoking inflation concerns and extending a global bond selloff.
The US struck Iranian military targets near the Strait of Hormuz, while Tehran said it had targeted US assets across the region, marking the most significant exchange of fire since July. Fears of further disruption to energy supplies lifted oil prices, with Brent crude futures last up 0.6 per cent at $95.18 a barrel.
Wall Street futures pointed to another weak start after hitting one-month lows in the prior session. The pan-European STOXX 600 fell 0.3 per cent, after sharper losses in Asia. South Korea’s KOSPI dropped almost 4pc, while the Nikkei 225 was down 2.9pc.
The escalation in the Middle East and the global bond selloff have given September a shaky start, adding to pressure on markets days after hawkish comments from Federal Reserve Chair Kevin Warsh prompted investors to increase bets on a US interest rate hike.
Traders now assign a roughly two-in-three chance that the Fed will deliver a 25-basis-point rate increase this month, up from 37pc a week ago, according to CME Group’s FedWatch tool.
Ahead of the Fed’s September 16 meeting, investors are looking to upcoming US economic data for clues on whether the economy remains strong enough to justify monetary policy tightening.
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