Asian Shares Drop as US Price Data Revives Rate Hike Concerns
Asian shares slide while the dollar remains firm
Asian shares slid on Friday while the dollar was firm after US consumer prices increased more than expected. This has bolstered the case for the Federal Reserve to keep rates higher for longer.
Asian stock index falls sharply
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.94% on Friday, marking its biggest one-day percentage drop in a week. The index had scaled a three-week high on Thursday.
Chinese stocks decline due to deflationary pressures
Declines for Chinese stocks were particularly significant after data showed China’s consumer prices remained flat in September. Additionally, factory-gate prices shrank at a slower pace, indicating persistent deflationary pressures.
US consumer prices surge
The increase in US consumer prices for September contained a surprise surge in rental costs. Traders now see a stronger chance of the Federal Reserve delivering another hike this year.
Concerns over labour market softening
Separate data showed an increase in the number of Americans receiving benefits after an initial week of aid. This increase is seen as a proxy for hiring and could impact the Federal Reserve’s goal of returning inflation to target.
Treasury yields rise after inflation report
The inflation report, along with poor demand for US 30-year bonds, sent Treasury yields higher on Thursday. However, in Asian hours on Friday, the yield on eased slightly.
Middle East tensions impact market sentiment
The sharp escalation of Middle East tensions has also contributed to cautious market sentiment across various sectors.
Dollar gains, yen weakens
The dollar has gained against a basket of currencies, while the Japanese yen remains under pressure.
Gold and oil prices fluctuate
Gold prices edged up, while oil prices rose on Friday due to the US tightening its sanctions program against Russian crude exports.
By Ankur Banerjee
SINGAPORE – Asian shares slid on Friday while the dollar was firm after US consumer prices increased more than expected. This has bolstered the case for the Federal Reserve to keep rates higher for longer.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.94% on Friday, marking its biggest one-day percentage drop in a week. The index had scaled a three-week high on Thursday.
Declines for Chinese stocks were particularly significant after data showed China’s consumer prices remained flat in September. Additionally, factory-gate prices shrank at a slower pace, indicating persistent deflationary pressures.
The increase in US consumer prices for September contained a surprise surge in rental costs. Traders now see a stronger chance of the Federal Reserve delivering another hike this year.
Separate data showed an increase in the number of Americans receiving benefits after an initial week of aid. This increase is seen as a proxy for hiring and could impact the Federal Reserve’s goal of returning inflation to target.
The inflation report, along with poor demand for US 30-year bonds, sent Treasury yields higher on Thursday. However, in Asian hours on Friday, the yield on eased slightly.
The sharp escalation of Middle East tensions has also contributed to cautious market sentiment across various sectors.
The dollar has gained against a basket of currencies, while the Japanese yen remains under pressure.
Gold prices edged up, while oil prices rose on Friday due to the US tightening its sanctions program against Russian crude exports.
