Brent crude hit $94.93 after Iran closed the Strait of Hormuz. Asia tech stocks deepened their selloff as a hot US CPI print and rising oil costs hit growth stock valuations on two fronts.
Iran announced Wednesday it would close the Strait of Hormuz after fresh US strikes, sending Brent crude 2% higher to $94.93 in Asian trading and deepening a selloff in regional technology stocks that began after a hotter-than-expected US inflation reading.
The United States launched a new round of strikes against targets in Iran hours earlier, the US military said. President Donald Trump had vowed renewed attacks if no peace deal was secured. Iran responded by shutting the waterway that handles about a fifth of global oil shipments.
The S&P 500 fell 1.6% on Wednesday, with the Nasdaq down 2.0%, after consumer price data showed US inflation accelerating at its fastest pace since April 2023. Fed funds futures now price a 51.6% probability that the Federal Reserve will hike at its October 28 meeting, up from a 50.1% chance the prior day that the central bank would hold through December, according to the CME Group's FedWatch tool. The 10-year US Treasury yield rose 2.6 basis points to 4.564%.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.9% in Thursday trade. South Korea's KOSPI led declines with a 3% fall. Markets that had rallied hardest over the prior two months carry the most risk, said Rupal Agarwal, Asia quant strategist at Bernstein in Singapore.
"Given already stretched valuations, these extreme bullish expectations set a vulnerable backdrop for momentum in Korea, Taiwan and the Asia tech sector," Agarwal wrote in a client note. Trimming positions would be "most prudent," she said. "The re-escalation on the war front could further accelerate this unwind."
The US dollar index held at 100.03, within the tight range it has traded all week. Safe-haven flows have pushed the greenback to its strongest levels since the US and Iran began ceasefire negotiations in early April, before those talks collapsed.
S&P 500 e-mini futures pointed 0.3% lower, indicating the selloff has not found a floor, traders said.
Bitcoin fell 0.5% to $61,445.19. Ether dropped 0.6% to $1,619.04. The upcoming SpaceX IPO has driven a rotation out of cryptocurrencies and other speculative assets, traders said.
Weekly US jobless claims are due Thursday at 8:30 a.m. ET.
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