(Adjusts the vice presidential debate to the end of Tuesday, not Wednesday, in the last paragraph)
Written by Kevin Buckland
TOKYO (Reuters) – Asian shares sank on Wednesday, receiving a sell-off on Wall Street after Iran's ballistic missile strike on Israel stoked fears of a wider regional conflict, while risking supply disruptions.
Investors flocked to safe-haven assets, pushing up US Treasury bond yields during the Asian session, while gold edged higher.
The safe-haven dollar is trading near its strongest in three weeks against the euro. Macroeconomics also boosted the dollar, with a strong US job market arguing against the Federal Reserve's interest rate cut in November, and inflation trends in areas supporting European Central Bank cuts this month.
It was down 1.5% as of 0022 GMT, with South Korea down 1.3% and Australia's benchmark down 0.3%.
MSCI's broad index of Asia-Pacific shares fell about 0.5%.
Hong Kong's was supposed to open after the holiday on Tuesday. Mainland Chinese markets are closed for the week-long Golden Week holiday. Trade in Taiwan has been suspended due to the typhoon.
US stock index futures weakened by 0.16%, after the currency index lost 0.9% overnight.
“In a series of volatile market conditions, geopolitics will significantly lower the economy, corporate earnings, or the central bank's response – mainly because most market players are poor in price risk for these events,” said Chris Weston, head of research at Pepperstone.
“While these events tend to agree in an attractive way to the market, the potential tail risk is significant,” Weston said. “The situation remains unchanged, and a slight calm or an increase in aggressiveness in comments from Israel or Iran could have a significant impact on market sentiment.”
Iran said early Wednesday that its missile attacks on Israel had ended to prevent further provocations, despite Israel and the US vowing to retaliate.
Futures gained more than 1% to $74.33 a barrel, extending a 2.5% advance from Tuesday. US WTI futures gained 1.3% to $70.73 a barrel, after Tuesday's rally up 2.4%.
Gold fell 0.16% to $2,658.63 an ounce, following a more than 1% jump in the previous session that brought it close to last month's record high of $2,685.42.
Benchmark 10-year Treasury yields fell 1.5 basis points (bps) to 3.7278%.
The , which tracks the US currency against the euro and five other major rivals, was steady at 101.21 after pushing as high as 101.39 on Tuesday for the first time since September 19.
The European share was little changed at $1.1070 following a 0.6% drop in the previous session, when it fell to $1.1046 for the first time since September 12.
Euro area data on Tuesday showed that inflation fell below the ECB's target rate of 2% last month, strengthening bets for a quarterly rate cut on October 17.
Meanwhile, US figures overnight showed a strong economy, a day after Fed Chairman Jerome Powell backed off the possibility of a 50 basis point rate cut when the US central bank meets next month.
Job openings rose unexpectedly in August after two straight monthly declines, but hiring was soft and in line with labor market slowdowns.
Private payrolls data will be released later on Wednesday, ahead of the potentially important monthly non-farm payrolls numbers on Friday.
US politics will also be in focus, with Democrat Tim Walz and Republican JD (NASDAQ: ) Vance going head-to-head in the vice presidential debate late Tuesday.
