Asia traders were bracing themselves for a stormy Wednesday after data showed US prices rose faster than expected last month fuelling fears of more aggressive interest rate hikes.
The dollar index reversed course to rally sharply and US stocks sank while Treasury yields climbed after Tuesday’s figures showed the Consumer Price Index gained 0.1% last month – despite expectations of a 0.1% decline and after being unchanged in July.
Oil futures give up earlier gains in choppy trading after declining gasoline prices in August were offset by gains in rent and food costs.
US stock indexes had rallied on Monday and also gained ground last week as investors were betting that Tuesday’s data would show some dampening in inflation. The inflationary shockwave is sure to be felt across Asia in Wednesday trading.
The Dow Jones Industrial Average fell 718.06 points, or 2.22%, to 31,663.28, the S&P 500 lost 103.91 points, or 2.53%, to 4,006.5 and the Nasdaq Composite dropped 389.45 points, or 3.17%, to 11,876.96.
The pan-European STOXX 600 index lost 1.02% and MSCI’s gauge of stocks across the globe shed 2.00%.
In currencies the dollar index rose 0.97%, with the euro down 0.85% to $1.0033. The Japanese yen weakened 0.84% versus the greenback at 144.05 per dollar
Oil prices were lower after the inflation data implied more hefty rate hikes from the Fed and renewed Covid-19 curbs China, the world’s second-largest oil consumer, also weighed on crude prices.
- Reuters with additional editing by Sean O’Meara