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What is the story about?
Asian shares declined after Wall Street losses as US inflation quickened as a result of the impact of higher oil rates ever since the Iran war started.
The MSCI Asia Pacific indexdeclined 0.4% with South Korea stocks declining 2.4%. US equity index futures slipped as well after the S&P 500 and Nasdaq 100 retreated overnight.
A faster-than-estimated rise in the core US consumer price index spurred an increase in Treasury yields during the US session, with traders boosting bets on a Federal Reserve interest-rate hike in 2027. Brent crude edged lower to hold at over $107 barrel on Wednesday, following three consecutive days of gains.
Elevated oil prices and mounting inflation risks are threatening to derail the blistering rebound in equities from their war-driven lows, a rally fueled by gains in semiconductor stocks and robust earnings from megacap tech companies. The surge in chipmakers has already prompted calls for a pause, as the conflict in Iran clouds the outlook for growth while adding to price pressures.
US inflation accelerated in April on rising gasoline and grocery costs, exceeding wage growth in a double-whammy for already strained consumers. The CPI rose 3.8% from a year earlier, the most since 2023. The core gauge, which excludes food and energy, increased 2.8%. A gauge of the dollar advanced for a second session on Tuesday.
Treasuries fell as rising oil prices threatened to keep inflation at levels that could prompt the Fed to raise rates next year. The US 30-year yield reached 5.02%, within two basis points of this year’s high, while two-year yields traded at about 4% during the US session.
On the geopolitical front, President Donald Trump said he would prioritize trade discussions during his summit with Chinese counterpart Xi Jinping this week, and downplayed the amount of attention they would devote to the Iran war.
Traders have ramped up wagers the yuan will strengthen in coming days in a bet that the meeting will support a trade truce between the nations.
Elsewhere, UK bonds tumbled amid a political drama that’s adding pressure to a market already battered by the country’s fiscal issues. Prime Minister Keir Starmer survived in post into Tuesday evening despite a slew of ministerial resignations which have so far failed to force his downfall.
With inputs from Bloomberg
The MSCI Asia Pacific indexdeclined 0.4% with South Korea stocks declining 2.4%. US equity index futures slipped as well after the S&P 500 and Nasdaq 100 retreated overnight.
A faster-than-estimated rise in the core US consumer price index spurred an increase in Treasury yields during the US session, with traders boosting bets on a Federal Reserve interest-rate hike in 2027. Brent crude edged lower to hold at over $107 barrel on Wednesday, following three consecutive days of gains.
Elevated oil prices and mounting inflation risks are threatening to derail the blistering rebound in equities from their war-driven lows, a rally fueled by gains in semiconductor stocks and robust earnings from megacap tech companies. The surge in chipmakers has already prompted calls for a pause, as the conflict in Iran clouds the outlook for growth while adding to price pressures.
US inflation accelerated in April on rising gasoline and grocery costs, exceeding wage growth in a double-whammy for already strained consumers. The CPI rose 3.8% from a year earlier, the most since 2023. The core gauge, which excludes food and energy, increased 2.8%. A gauge of the dollar advanced for a second session on Tuesday.
Treasuries fell as rising oil prices threatened to keep inflation at levels that could prompt the Fed to raise rates next year. The US 30-year yield reached 5.02%, within two basis points of this year’s high, while two-year yields traded at about 4% during the US session.
On the geopolitical front, President Donald Trump said he would prioritize trade discussions during his summit with Chinese counterpart Xi Jinping this week, and downplayed the amount of attention they would devote to the Iran war.
Traders have ramped up wagers the yuan will strengthen in coming days in a bet that the meeting will support a trade truce between the nations.
Elsewhere, UK bonds tumbled amid a political drama that’s adding pressure to a market already battered by the country’s fiscal issues. Prime Minister Keir Starmer survived in post into Tuesday evening despite a slew of ministerial resignations which have so far failed to force his downfall.
With inputs from Bloomberg
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