Asian stocks and bonds are poised for declines following a selloff in US markets, triggered by a sharp rise in oil prices. Brent crude climbed above $107 a barrel on Thursday, contributing to increased Treasury yields and a stronger dollar. This market reaction is reinforced by recent inflation data that suggests the Federal Reserve is likely to raise interest rates soon.
US stocks concluded Thursday lower, with the S&P 500, Nasdaq, and Dow all experiencing drops of around 0.6%. The S&P 500 fell 0.58% to 7,591, the Nasdaq decreased by 0.65% to 26,081, and the Dow Jones Industrial Average shed 0.6% to 52,064. This downturn was largely driven by concerns over inflation and rising Treasury yields, which make stocks less attractive to investors. The yield on the 10-year Treasury note surged to 4.91% from 4.83% the previous day, marking its highest level since 2023.
Producer price data for August showed wholesale inflation accelerating to 5.4% from 4.8% in July. This, combined with oil prices jumping back above $105 per barrel, has intensified expectations for a Fed rate hike. Traders are now pricing in a 70% to 71% chance of a quarter-percentage-point increase in the federal funds rate at next week's meeting, up from 61% the day before.
Key sectors and companies were affected, with chipmakers like Nvidia and Micron Technology experiencing declines of 2.3% and 4.7% respectively. Conversely, Apple saw a 3.6% gain after releasing its new $1,999 folding iPhone. Macy's shares fell 2.7% despite reporting stronger-than-expected profit and revenue, and raising its full-year forecasts, due to warnings about macroeconomic and geopolitical factors.
