SINGAPORE - Asian stocks fell on Thursday, weighed down by a Wall Street selloff after a hotter-than-expected US inflation reading, while renewed US strikes on Iran fuelled a rise in oil prices.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.9 percent, led by a 3 percent drop in South Korea's KOSPI. S&P 500 e-mini futures were 0.3 percent lower. Brent crude rose 2 percent to $94.93 a barrel as trading resumed in Asia.
Strategists believe that Asian stocks that had rallied hardest during the past two months are likely to extend recent losses, as markets question whether the sky-high expectations for earnings growth that had driven the gains can be maintained.
On Wednesday, the S&P 500 was down 1.6 percent with the Nasdaq Composite 2.0 percent lower after data showed US inflation accelerated last month at its fastest pace since April 2023, albeit in line with market expectations. Brent crude prices settled at $93.10 a barrel, up $1.65 or 1.8 percent, as US President Donald Trump threatened to resume attacks on Iran.
The US dollar index, which measures the greenback's strength against a basket of six currencies, held steady at 100.03, firmly within the tight trading range it has sat in throughout the past week. Safe-haven buying has driven the global reserve currency to its strongest levels since the US and Iran began negotiating a ceasefire in early April.
Meanwhile, market expectations of the timing of the next rate hike moved closer, though they remain finely balanced. Fed funds futures are now pricing an implied 51.6 percent probability that the Federal Reserve's next hike will come at its two-day meeting on Oct 28, compared to a 50.1 percent chance a day earlier that the US central bank would remain on hold until December, according to the CME Group's FedWatch tool.
The yield on the US 10-year Treasury bond was up 2.6 basis points at 4.564 percent.
Bitcoin was down 0.5 percent at $61,445.19, while ether was 0.6 percent lower at $1,619.04, as the upcoming SpaceX IPO drove a rotation out of cryptocurrencies and other speculative assets.
Gold was off 0.3 percent at $4,059.59.
