Asian markets fell 1.3% as oil climbed to $110 and inflation data fuels Fed hike bets
Asian equities dropped while Brent crude rose sharply, prompting traders to increase expectations for a Federal Reserve interest rate increase next week.
Investors sold off assets in Asia after rising oil prices and new inflation figures strengthened the case for higher interest rates. The MSCI Asia Pacific Index lost 1.3%, with losses in Japan and South Korea exceeding the 0.5% decline in the S&P 500. Brent crude surged to nearly $110 per barrel, lifting Treasury yields to their highest levels in years. Bond markets felt added pressure because the US Treasury purchased fewer securities than expected. Producer price data came in faster than anticipated, causing traders to boost bets that the Federal Reserve will raise rates next week. Australian three-year yields jumped 20 basis points to 5.05% and New Zealand two-year yields climbed 21 basis points. Oracle Corp shares rose about 6% in extended trading after reporting stronger cloud-computing growth than analysts forecast. The upcoming US consumer price index report is a critical test for market sentiment, as investors watch to see if energy costs are driving broader inflation.
