Asia Stocks Drop as Inflation Worries Mount: Markets Wrap

Asia Stocks Drop as Inflation Worries Mount: Markets Wrap
Andreea Papuc
·3 min read

(Bloomberg) -- Asian stocks extended a selloff Thursday after a rise in U.S. inflation sent the S&P 500 tumbling and drove bond yields higher on concerns that price pressures could stifle the economic recovery.

A regional equities gauge erased this year’s gain, though declines from Japan to Australia haven’t yet matched the magnitude of the pull back in indexes overnight. The S&P 500 and Nasdaq 100 both shed more than 2% in a third-straight day of losses, though the energy sector climbed as commodity prices continued their advance. And U.S. futures edged higher in early Asia trade.

Treasury yields steadied from a climb in U.S. hours, which shrugged off strong demand at the auction of new 10-year notes. Asia investment-grade bonds weakened, while the dollar held an advance.

Oil retreated back below $66 a barrel. The biggest U.S. gasoline pipeline is reopening after a cyberattack that sparked acute fuel shortages. Copper’s advance stalled after the inflation numbers.

The latest U.S. consumer prices data showed the biggest monthly rise since 2009, adding fuel to the debate over whether inflation will be persistent enough to force the Federal Reserve to tighten policy sooner than thought. The surprise reading included broad-based price pressures, and a market gauge of inflation expectations over the next five years touched its highest level since 2005 before easing.

Fed Vice Chair Richard Clarida said he was surprised by the jump, but that it should prove largely transitory.

“Markets have lost a little bit of confidence that the Fed has control of inflation; I don’t think it’s necessarily the level,” but the concern that the central bank might wait too long to address the rise, Victoria Fernandez, Crossmark Global Investments chief market strategist, said on Bloomberg TV. “I am not sure the market is extremely comfortable with that at this point.”

Elsewhere, Bitcoin extended a drop after Elon Musk tweeted that Tesla Inc. has suspended vehicle purchases using the digital currency over environmental concerns. He added that Tesla will not be selling any Bitcoin.

These are some of the main moves in markets:

Stocks

S&P 500 futures rose 0.3% as of 10:30 a.m. in Tokyo. The S&P 500 fell 2.1%Nasdaq 100 contracts added 0.4%. The Nasdaq 100 slid 2.6%Japan’s Topix index fell 0.8%Australia’s S&P/ASX 200 Index lost 0.5%South Korea’s Kospi index declined 0.3%Hong Kong’s Hang Seng Index fell 1.1%Shanghai Composite Index fell 0.7%

Currencies

The yen traded at 109.56 per dollar after slipping 1%The offshore yuan was at 6.4537 per dollarThe Bloomberg Dollar Spot Index dipped after rising 0.7%The euro was at $1.2083

Bonds

The yield on 10-year Treasuries dipped to 1.68% after jumping seven basis pointsAustralia’s 10-year bond yield rose three basis points to 1.80%

Commodities

West Texas Intermediate crude fell 0.7% to $65.63 a barrelGold rose 0.4% to $1,821.91 an ounce

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