Asian stocks extend global rout; bonds hammered as war drags on

Market Overview - Asian stock markets experienced a significant decline, mirroring a global rout, as the ongoing conflict in the Middle East raised concerns over prolonged energy shocks and increased borrowing costs [1][5] - The MSCI's broadest index of Asia-Pacific shares outside Japan fell by 1.4%, indicating a weekly drop of 3%, while Japan's Nikkei index decreased by 1.3% and was down 0.9% for the week [5] - South Korea's KOSPI plunged by 3%, resulting in a weekly loss of 8.5%, highlighting the intense market pressures in the region [6] Oil and Energy Market - Brent crude futures decreased by 1% to $107.07 per barrel after a nearly 6% increase overnight, reflecting volatility in oil prices amid geopolitical tensions [2] - Analysts from Citi warned that severe scenarios from the Middle East conflict could lead to global growth falling below 2% and inflation exceeding 4%, raising recession risks [6] Bond Market - Global bond yields surged as inflation concerns intensified, with Japan's 10-year yields rising by 4 basis points to 2.31% and Australia's benchmark 10-year yields increasing by 7 basis points to 5.076% [10] - The U.S. two-year Treasury yield remained steady at 3.9714%, having increased by 10 basis points overnight, as traders anticipated a higher likelihood of interest rate hikes from the U.S. Federal Reserve [10] Currency Market - The U.S. dollar strengthened as a safe-haven asset, gaining for three consecutive sessions, while the Australian dollar fell by 0.2% to a two-month low of $0.6872 [11] - The euro held at $1.1533 after a 0.3% decline overnight, and the yen remained stable at 159.70 per dollar, with market observers expecting intervention if it reaches 160 [11]