Indian shares are expected to open lower on Monday as investors respond to escalating geopolitical tensions and rising global bond yields.
Brent crude prices jumped more than 2 percent to trade above $90 a barrel following a direct military exchange between American and Iranian forces.
American forces targeted two rocket launches on Iran’s Larak Island, killing and wounding several Iranian fighters and civilians in the strike.
Washington “took limited, precise action against IRGC minelaying forces posing an imminent threat in the Strait of Hormuz,” the U.S. Central Command said.
Iran’s Islamic Revolutionary Guard Corps subsequently said it launched retaliatory attacks on U.S. military bases in Jordan, escalating an already volatile situation.
Asian markets were broadly lower, with South Korea, Japan and Hong Kong leading regional losses ahead of the G20 finance ministers meeting in Asheville, North Carolina.
The G20 gathering of finance ministers and central bank governors begins today, adding another layer of uncertainty to already jittery global markets.
U.S. short-term Treasury yields moved sharply higher after Federal Reserve Chair Kevin Warsh delivered a hawkish tone in his Jackson Hole speech on Friday.
Bond yields surged after Fed Chair Kevin Warsh said that underlying inflation is not slowing and vowed to bring it down closer to 2 percent, even if it causes pain for the economy in the short term.
Two-year U.S. Treasury yields held at 4.36 percent after rising almost 12 basis points on Friday, reflecting growing market bets on a September rate hike.
Gold fell 0.7 percent to $4,421 an ounce after tumbling about 3 percent on Friday as traders increased their expectations for a Federal Reserve rate hike in September.
The dollar held steady near a two-week high as safe-haven demand and hawkish Fed expectations combined to keep the greenback well supported.
U.S. stocks ended firmly in the red on Friday amid bets that the Federal Reserve may hike interest rates soon to get sticky inflation under control.
The tech-heavy Nasdaq Composite dipped half a percent, the S&P 500 eased 0.3 percent and the narrower Dow finished marginally lower on Friday.
European markets bucked the trend, with the pan-European STOXX 600 gaining half a percent as French stocks recovered and Eurozone economic confidence hit a seven-month high in August.
The German DAX surged 0.8 percent, France’s CAC 40 rallied 1 percent and the U.K.’s FTSE 100 edged up 0.3 percent to close out a mixed week for global equities.
