Asian Stocks to Fall as Hot CPI Sparks US Selloff: Markets Wrap
(Bloomberg) — Asian stocks were set to decline, tracking a tech-led Wall Street selloff after hotter-than-expected US inflation fueled bets on more aggressive Federal Reserve rate hikes. The dollar rose.
Equity-index futures for Japan, South Korea and Australia all declined, putting a regional stock gauge on course for a fourth straight day of losses. Wall Street contracts pointed lower after the S&P 500 Index dropped 1.1% and the Nasdaq 100 suffered its steepest slide since late July. The Russell 2000 entered a correction.
Technology shares bore the brunt of the selloff as higher rate expectations added to concerns over lofty valuations and the enormous cost of building artificial-intelligence infrastructure. A closely watched gauge of semiconductor stocks including Nvidia Corp. and Broadcom Inc. dropped for a sixth day, its longest losing streak since May 2025.
Earlier, the fastest US inflation in five months prompted traders to ramp up bets on further Fed tightening, raising the prospect of additional rate hikes even if policymakers pause in October. While Treasuries initially sank after the data was announced, they recovered most of the losses on appetite for bond yields near multiyear highs. Gold slumped.
Stubborn US inflation, fueled by elevated oil prices since the Middle East war broke out, is raising the prospect of more aggressive Fed rate hikes. At the same time, equity markets are coming under pressure after a blistering rally in AI-related stocks, bringing the US market’s longest stretch of tranquility since before the Covid-19 pandemic to an end.
“With broadening inflation pressures becoming more evident in today’s CPI report, the Fed is increasingly at risk of falling behind the curve in containing inflation,” wrote Ronald Temple, chief market strategist for Lazard’s Financial Advisory and Asset Management businesses.
What Bloomberg’s Strategists Say…
Nasdaq futures are slipping below the overnight nadir in early Thursday action, which is another negative signal for Korean and Japanese stocks that open first in Asia. Treasury futures are catching a bid, with USD/JPY a touch lower. Investors are looking ahead to TSMC earnings in the afternoon, but it would need to be an extraordinarily upbeat outlook to reverse the gloomy mood across equities today.
— Mark Cranfield, MLive Strategist. For full analysis, click here.
The consumer price index rose 0.6% in September from a month earlier, according to Bureau of Labor Statistics data out Wednesday, and climbed 3.7% from a year earlier. The move was driven by rising fuel costs, while a gauge of underlying price pressures also rose more than expected.
The two-year Treasury yield jumped as much as 16 basis points after the inflation reading before ending two basis points higher, while the five-year topped 5.15% for the first time since 2007. The 10-year yield fell two basis points to 5.19%.
The dollar rose to its highest in more than a year, extending its longest weekly winning streak since early 2025 as traders ramped up Fed tightening bets. Markets now price about 40 basis points of hikes by the end of January, with the odds of an October move also rising.
“It’s clear as ever that inflation is stubborn and moving in the wrong direction,” said Skyler Weinand at Regan Capital. “While we expect the Fed to pause on any rate changes in October, we expect rate hikes to resume in December.”
Precious metals tumbled as the inflation surprise pushed rate expectations higher. Gold slumped, silver fell to its lowest since July 20, and platinum and palladium also declined.
Elsewhere, US oil inched higher in early Asian trading as escalating hostilities from Russia to the Middle East threatened supply flows that had only recently recovered toward pre-war levels.
Brent settled above $106 a barrel after Iran-backed Houthi rebels launched missile and drone strikes across Saudi Arabia, including an attack that damaged Saudi Aramco’s headquarters. The strikes added to an escalation in Iranian attacks on tankers in the Strait of Hormuz, threatening the recovery in Gulf supply.
“Developments over the past week are yet another reminder that recovering flows are not the same as secure flows,” said Emily Ashford, head of energy research at Standard Chartered Bank. “With both infrastructure and shipping increasingly vulnerable, the risk premium is proving difficult to unwind.”
Corporate Highlights:
Apple Inc. is gearing up to release its artificial-intelligence platform in mainland China. With strong earnings from global chip majors failing to boost the AI trade, Taiwan Semiconductor Manufacturing Co. faces a high bar to impress investors. The initial public offering of Jio Platforms Ltd., the telecom and digital services arm of billionaire Mukesh Ambani’s Reliance Industries Ltd., will open for public subscription on Oct. 21 and close two days later, staying on track to become India’s largest-ever listing. A majority of supervisors at BHP Group’s Escondida mine in Chile approved a new wage offer Wednesday, averting a strike at the world’s biggest copper operation, the union said. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 8:11 a.m. Tokyo time Hang Seng futures fell 1.1% Australia’s S&P/ASX 200 fell 0.6% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1172 The Japanese yen rose 0.1% to 158.10 per dollar The offshore yuan was little changed at 6.6943 per dollar The Australian dollar was little changed at $0.6974 Cryptocurrencies
Bitcoin fell 0.2% to $81,500.48 Ether was little changed at $2,416.42 Bonds
Australia’s 10-year yield declined one basis point to 5.30% Commodities
West Texas Intermediate crude fell 0.3% to $94.82 a barrel Spot gold fell 0.1% to $4,100.50 an ounce This story was produced with the assistance of Bloomberg Automation.
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