Asian stocks fell, tracking losses on Wall Street, as surging oil prices stoked inflation concerns and as Treasury yields rose. Oil extended gains over $101 per barrel.
The MSCI Asia Pacific Index slipped 0.3%, with benchmark gauges in Japan and Australia opening lower, while South Korea’s was little changed. The S&P 500 Index fell 0.5% in the US session, led by industrial and consumer-discretionary shares. The Nasdaq 100 Index dropped 0.3% as Nvidia Corp., Amazon.com Inc. and Alphabet Inc. declined.
The 10-year Treasury yield was steady in Asian trading after rising Wednesday as the US government’s plan to buy up to $6 billion of longer-dated debt disappointed some investors who had expected a larger increase. West Texas Intermediate rose to around $97 a barrel early Thursday while Brent advanced 0.5% to $101.69 as escalating Middle East tensions raised concerns about energy supplies, adding to expectations the Federal Reserve will raise interest rates to contain inflation.
The combination of higher oil prices and rising bond yields leaves markets particularly sensitive to Friday’s US inflation report, which may determine whether the Fed raises rates this month. A stronger-than-expected reading may reinforce bets on further tightening and put additional pressure on stocks and bonds, while softer data could revive expectations that policymakers will remain on hold.
“The longer elevated prices persist, the harder it becomes for markets to shrug the inflation impulse,” said Evelyne Gomez-Liechti, a multi-asset strategist at Mizuho International Plc.