Crude jumps amid renewed hostilities in West Asia; Brent above $87

Crude oil prices increased while Treasuries declined following the outbreak of hostilities in the Middle East, which disrupted several days of stability and reignited fears regarding energy supply interruptions. Asian stock markets experienced gains.

Brent crude surged by more than 4%, reaching approximately $87.50 per barrel, recovering from its most significant three-day drop since April 2020 after the US military reported intercepting an Iranian "surprise attack" on its forces and retaliated against the Islamic Republic.

Treasuries experienced a downturn across the yield curve, with the yield on the benchmark 10-year note rising by one basis point to 4.62% as investors considered the potential inflationary effects in anticipation of the Federal Reserve's policy announcement on Wednesday.

Technology stocks in Asia saw modest increases following Tuesday's market selloff, with South Korea's Kospi Index rising by about 1.2%. Chipmaker SK Hynix Inc. fluctuated between gains and losses after reporting a 557% increase in quarterly profits, although it fell short of high expectations. The broader MSCI Asia Pacific Index rose by 0.6%, recovering from its worst performance in over a month on Tuesday.

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Contracts for the Nasdaq 100 reversed earlier losses attributed to Iran and increased by over 0.5%. Previously, a selloff in chipmakers had brought the underlying index close to a technical correction as investors shifted away from prominent chipmakers towards sectors more sensitive to economic conditions.

The renewed hostilities in the Middle East have caused investors to refocus on the Strait of Hormuz, as the threat of interruptions in oil supply could exacerbate inflation just prior to the Federal Reserve's rate decision on Wednesday. This development adds further uncertainty for investors who are already moving away from tech stocks amid increasing scepticism regarding whether the significant expenditures on artificial intelligence will produce sufficient returns.