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Global financial markets traded lower on Thursday as expectations grew that the US Federal Reserve could raise interest rates once more before year-end, while escalating Middle East tensions added to investor unease. Oil prices climbed and bond yields hit multi-decade highs, weighing on stocks across Wall Street, Europe and Asia.

Reports that the White House asked the Pentagon to prepare strike options against Iranian targets fuelled fears of new attacks. Brent crude rose above $102 a barrel as shipping through the Strait of Hormuz slowed, stoking inflation concerns and raising the prospect of more hawkish central bank policies. Minutes from the Fed's September 15-16 meeting indicated officials saw upside inflation risks and considered another rate increase likely by December. Money markets priced a 94% chance of a December hike, while the 10-year Treasury yield touched 5.36%, its highest since April 2002.

Wall Street's main indexes ended the day in the red, and European bourses fell, with Italy's FTSE MIB losing 2.51%. Asian shares also declined, with China's markets reopening after a holiday. In Istanbul, the BIST 100 index shed 2.03% to close at 12,122.94 points, while the lira traded near 49.21 against the dollar. Attention now turns to the Istanbul Economics Forum, where central bank chiefs, including Fed Governor Christopher Waller, are set to speak.

Key Takeaways

• Fed minutes point to one more rate hike before year-end, with markets pricing a 94% chance of a December increase.
• Middle East tensions push Brent crude above $102 as Hormuz shipping slows; 10-year US Treasury yield hits highest level since 2002.
• BIST 100 falls 2.03% to 12,122.94 points; European and Asian stock indexes also close lower.