South Korean stocks slip 2.9% as Asian equities fall on oil gains, bonds drop

Published Wed, Sep 2, 2026 · 09:32 AM

ASIAN stocks declined as surging oil prices drove global bond yields higher and fuelled concerns that resurgent inflation will force central banks to tighten monetary policy.

MSCI’s Asia Pacific equities gauge fell 1 per cent, with South Korean stocks declining 2.9 per cent. That came after the S&P 500 Index dropped for a third consecutive session and the Nasdaq 100 Index fell 1.3 per cent.

Among the main moves across markets, S&P 500 futures were little changed as at 9.04 am Tokyo time. Hang Seng futures were little changed, Japan’s Topix fell 1.6 per cent and Australia’s S&P/ASX 200 dropped 1.1 per cent.

Dell Technologies bucked the tone, jumping around 7 per cent in extended trading after raising its annual sales forecast.

Meanwhile, Brent crude extended gains to trade around US$95.30 a barrel, as escalating fighting between the US and Iran heightened the risk of further disruptions to oil flows through the Strait of Hormuz.

Rising oil prices pressured bonds, pushing global yields to the highest since 2008, as traders increased bets the US Federal Reserve will raise interest rates.

Government bonds in Australia and New Zealand opened lower on Wednesday (Sep 2) after the 10-year Treasury yield rose five basis points to 4.8 per cent in the New York session.

Gold held its losses from the previous session, trading around US$4,330 an ounce.

The renewed surge in energy prices is adding to inflation concerns already fuelled by government spending and heavy corporate borrowing to finance the artificial intelligence buildout.

With markets raising the odds of a Fed hike in September, investors are watching oil and bond yields for signs of further pressure on equities.

US President Donald Trump said the US strikes were in retaliation for Iran’s attempt to mine the strait and an earlier attack on a military base in Jordan. While the US military completed the strikes, Iran said it launched a missile attack on a US air base in Jordan.

The exchange followed weeks of relative calm, during which the Trump administration had shifted from military action towards economic pressure on Teheran. Neither side has shown much appetite to resume talks since an interim peace deal collapsed.

The renewed tensions are adding to Wall Street’s challenges as a global bond rout deepens. Fed chair Kevin Warsh’s Jackson Hole speech last week also fuelled expectations for tighter monetary policy, with markets now assigning about a 70 per cent probability to a September rate increase.

Fed governor Michael Barr said the central bank should be prepared to raise rates if inflation fails to subside, warning price pressures are at risk of becoming entrenched after being above target for more than five years.

Friday’s US payrolls report may offer the next clue on the policy outlook, with inflation still running above the Fed’s 2 per cent target.

“Warsh will be attentive to the impact that higher oil has on inflation compensation across all horizons and on bond yields,” said Krishna Guha at Evercore. “A single Fed hike would have a trivial effect on longer-term yields and even two or three may not have much impact.” BLOOMBERG