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

• The Nasdaq Composite fell 2.4% overnight, confirming an 11% correction from its October 29 peak, while MSCI Asia-Pacific dropped 1.4% with South Korea's KOSPI plunging 8.5% for the week
• Brent crude fell 1% to $107.07/barrel after jumping 6% previously; analysts warn severe conflict scenarios could push global inflation beyond 4% and drag growth below 2%
• Global bond yields spiked on inflation fears, with markets now pricing in a 50% chance of a U.S. Fed rate hike this year; Norway's central bank reversed course to signal rate increases ahead

Summary: Asian Markets Plunge Amid Middle East Conflict and Inflation Fears

Asian stocks extended a global selloff on Friday, March 27, 2026, as the escalating U.S.-Israeli conflict with Iran threatens a prolonged energy crisis. The Nasdaq Composite fell 2.4% overnight, confirming a correction with an 11% decline from its October 29 record high.

Key Developments:

• President Trump delayed his Iran ultimatum by another 10 days but is reportedly considering deploying additional troops to the region
• Iran rejected U.S. peace proposals as "one sided and unfair"
• Brent crude fell 1% to $107.07/barrel after jumping 6% the previous session
• The Strait of Hormuz remains closed to shipping with no clear timeline for reopening

Market Performance:

• MSCI Asia-Pacific index down 1.4%, set for 3% weekly loss
• South Korea's KOSPI plunged 3%, with an 8.5% weekly decline
• Japan's Nikkei fell 1.3%; Chinese blue chips down 1%
• Hong Kong's Hang Seng slipped 0.4%

Bond Markets and Inflation:

Global bond yields surged on inflation concerns. Japan's 10-year yields rose 4 basis points to 2.31%, while Australia's jumped 7 basis points to 5.076%. U.S. two-year Treasury yields climbed to 3.97%, with markets pricing in 50% probability of a Fed rate hike.

Norway's central bank pivoted from expected rate cuts to forecasting increases this year.

Currency and Commodities:

The U.S. dollar strengthened as a safe haven, with the Australian dollar hitting a two-month low at $0.6872. Gold rose 0.6% to $4,405/ounce after falling 3% previously.

Citi analysts warned severe scenarios could push global growth below 2% and inflation beyond 4%, with Asian economies—particularly Korea, Japan, and India—facing the most significant headwinds due to fuel import dependence.