Oil shock reaches Asia: Kospi down 3.9%, Nikkei 2.8%, Brent near $96

• Asia is bearing the brunt. The Kospi is trading down 3.88% at 6,570.51 and the Nikkei 225 down 2.78% at 64,373.44. Mainland China has held up better — the Shanghai Composite is off 0.65% — and the Hang Seng is barely changed at -0.28%, having clawed back most of an early drop.
• US cash closed lower on Tuesday: the S&P 500 ended down 0.71% at 7,631.47, the Nasdaq Composite down 1.03% and the Dow down 0.79%. Futures are the only live read this morning and they are marginally softer — S&P 500 futures -0.13%, Nasdaq 100 futures -0.34% — so the American day is not yet pricing a fresh leg down.
• Europe finished Tuesday in the red, the DAX down 1.10%, the CAC 40 down 0.39% and the FTSE 100 down just 0.32%, cushioned by its energy weighting.

The driver is energy, and behind it the Middle East. US forces struck Iranian rocket launchers on Larak Island in the Strait of Hormuz and Iran retaliated against US bases in Jordan, ending roughly a month of quiet. Tankers are still moving through the waterway — some with transponders switched off — but the risk premium has been repriced hard: Brent is trading 0.99% higher at $95.59, up 6.57% over five sessions and 14.11% in a month. Worth keeping in proportion, though: even after that run, Brent sits 24.2% below its own 52-week high, so this is a sharp move within a wide range rather than a price spike into new territory.

The transmission into equities runs through rates. Higher crude feeds directly into headline inflation, which pushes back the point at which central banks can cut, and Tuesday's Treasury market moved accordingly — the five-year yield rose 5.0 basis points to 4.557% and the ten-year 3.8 basis points to 4.796%, a steeper move at the front than the 1.9 basis points added at 30 years. Higher discount rates hurt long-duration growth names most, which is why the Nasdaq led the US decline.

Korea is the clean expression of both problems: a chip-heavy, energy-importing index, already 29.99% below its 52-week high before this morning's fall.

Defensive, but not panicked. The VIX rose 9.52% to 16.34 on Tuesday — a real jump, yet still 53.71% below its own 52-week high. The more telling signal is in rates: the MOVE index gained 3.39% to 77.9 and is up 12.15% over five sessions, so the anxiety is being expressed in bonds rather than equity options.

Breadth confirms this was broad, not a handful of names. Across PrimerIQ's US universe 4,066 stocks fell against 1,765 that rose, a mean move of -0.75%; the UK was worse still at 213 advancers to 579 decliners. Sector dispersion is textbook oil-shock: Energy +1.27% and Utilities +0.78% against Technology -1.53%, Consumer Discretionary -1.72% and Industrials -1.37%. Gold is up 0.54% at $4,371.50 but has lost 5.17% over five days, and the dollar index is flat at 99.726 — so far this is a rotation, not a full flight to safety.

Nothing first-tier has landed in London this morning. The week's European numbers came on Tuesday: euro area flash inflation for August rose to 3.3% from 2.9%, driven by a 14.3% annual rate for energy, while core edged down to 2.4% from 2.5% — the split that will define the ECB argument. Also on Tuesday, Nationwide reported UK house prices up 0.2% in August against expectations of 0.1%, with annual growth of 1.6%.

Today's tests are American. The ADP private payrolls reading for August is due at 13:15 BST, with consensus around 47,000 after 44,000 previously; July factory orders follow at 15:00 BST; and the Federal Reserve's Beige Book lands at 19:00 BST, where the interesting passages will be what firms say about passing on energy costs. Friday's August employment report at 13:30 BST remains the week's main event.

The heavyweight US technology results — Dell, Palo Alto Networks, MongoDB and Credo Technology — all came after Tuesday's close, so their reception is a matter for today's session; Credo shares had already ended the day down 8.65%. In stock-specific news, Moderna rose 9.93% on positive Phase 3 vaccine data, and in London Bodycote gained 4.60% after agreeing a £1.65bn takeover by Veritas Capital.