Indian stocks and the rupee fell sharply on Wednesday after US President Donald Trump signaled the end of a truce with Iran. Fresh US strikes on Iran and rising oil prices triggered the selloff. Gold and silver prices also extended losses in Mumbai trading.
The declines followed escalating tensions in the Strait of Hormuz, where US-Iran negotiations broke down and the US-Iran Memorandum of Understanding became defunct. Oil prices surged more than 10 percent in two days, climbing $6 per barrel amid disrupted maritime traffic.
Bond yields in India rose the most in over three months while the country's volatility index increased. The rupee finished as Asia's worst-performing currency. Analysts noted that reactions to geopolitical events tend to prove short-lived.
Gold and silver retreated as higher oil prices fueled inflation concerns and supported a stronger US dollar. Investors now await minutes from the latest US Federal Reserve meeting for clues on interest rate policy. One market observer revised the year-end S&P 500 target down to around 8,500 from 9,500 due to the developments.
