Stocks decline as bonds decline and Middle East tension increases

As risk aversion increased due to growing concerns over the Middle East crisis, Asian markets declined on Thursday. The bond sell-off also increased, pushing Treasury rates to new 16-year highs ahead of Fed Chair Jerome Powell's eagerly anticipated speech.

Investors sought out safer investments, which kept gold prices close to two-month peaks and the dollar steady.

As investors come to terms with the Federal Reserve's messaging that interest rates may stay higher for longer, the broad sell-off in U.S. Treasuries continued into Asian hours, with the yield on 10-year notes setting a fresh 16-year high. When bond prices decline, yields increase.

During a brief visit on Wednesday, President Joe Biden vowed to support both Israel and the Palestinians.

Following an explosion at Gaza's Al-Ahli al-Arabi hospital late on Tuesday, which Palestinian officials claimed killed 471 people and was caused by an Israeli air strike, the area remained tense. Israel and the US claimed that a botched missile launch by Islamist militants in Gaza, who disputed involvement, was the cause of the incident.

On Thursday, oil prices declined after OPEC failed to endorse Iran's demand for an oil embargo on Israel and as the United States prepared to loosen sanctions against Venezuela to allow more oil to flow internationally.

On concerns about supply interruptions around the world, oil prices had jumped 2% higher in the previous session.

Meanwhile, despite some positive news from a flurry of data on Wednesday that highlighted an economy that was showing signs of stabilising, investor concerns about geopolitical risks following an expanding U.S. semiconductor export restriction cast a shadow over Chinese markets.

Investors have also been on edge due to concerns about the Chinese real estate market.

(Sources: investing.com, reuters.com)