Asian markets plunge as oil tops $100 and Fed rate hike bets mount

Asian stock markets tumbled on Friday, September 11, as surging oil prices, spiking bond yields, and escalating Middle East tensions converged to trigger one of the sharpest regional selloffs in months. Japan's Nikkei 225 fell around 3% in early trading while South Korea's Kospi dropped more than 3% to breach the 6,900 level, extending a week of losses driven by mounting fears of further central bank tightening worldwide.tradingkey+1

Oil and Yields Fuel the Rout

Brent crude climbed to a four-month high near $110 a barrel on Friday after a 6% overnight jump, capping a weekly gain of nearly 13%, as oil flows remained restricted through the Strait of Hormuz amid ongoing hostilities between the United States and Iran. West Texas Intermediate cracked $103 a barrel. The spike was compounded by Iran-aligned Houthi forces seizing control of Yemen's port of Mocha, threatening Saudi oil exports through the Red Sea.ibtimes+1

"Maritime traffic through the Bab el-Mandeb is gravely imperiled by the Houthi advances," said Helima Croft, head of global commodity strategy at RBC Capital Markets Royal Bank of Canada ↘ 0.40%, warning Brent could reach $122 a barrel later this year.freemalaysiatoday

The benchmark 10-year U.S. Treasury yield rose to 4.97%, its highest in three years, while the 30-year yield scaled a 19-year high of 5.38%. Markets priced in roughly a 70% probability the Federal Reserve will raise interest rates by 25 basis points at its September meeting, after stronger-than-expected U.S. producer price data earlier in the week.tradingkey+1

Chip Stocks Bear the Brunt

Technology and semiconductor shares led losses across the region. Samsung Electronics fell nearly 4%, SK Hynix ↘ 5.20% dropped over 4%, and Japan's Kioxia slid more than 5% at the open. SoftBank declined over 4%. The selloff followed four consecutive losing sessions on Wall Street, where the Philadelphia Semiconductor Index slumped 2.66% and chip makers including Micron Technology ↘ 4.90% and Intel ↘ 5.57% fell across the board.tradingkey

MSCI's ↘ 1.25% broadest index of Asia-Pacific shares outside Japan lost 1.8%, while Australia's ASX 200 extended its losing streak to a fourth session, closing down 0.75%. Chinese blue chips fell 1.2% and Hong Kong's Hang Seng dropped 1.5%.ibtimes+1

Central Banks Under Pressure

The oil shock has raised the stakes for global monetary policy. Analysts at JPMorgan ↘ 0.32% now expect eight of nine developed-market central banks to hike rates by year-end, including the Fed, the Bank of Japan, and the Reserve Bank of Australia. The European Central Bank raised rates overnight for a second time this year, with some officials signaling further tightening in October.freemalaysiatoday

In Australia, RBA Deputy Governor Andrew Hauser said the central bank will debate further tightening at its September meeting, citing persistent inflation risks. With President Trump saying the Middle East conflict could extend beyond the November midterm elections, investors see little prospect of near-term relief from the forces driving markets lower.ibtimes+1