Asian stocks and bonds dropped following a surge in oil prices, as investors awaited key US inflation data on Friday that may determine whether the Federal Reserve raises interest rates this month.
The MSCI Asia Pacific Index slid 1.4%, with Japan’s Nikkei 225 Stock Average sinking 2.2%. Brent crude traded at $106.81 a barrel after earlier rising to almost $110.
Bonds came under further pressure after the US Treasury bought back fewer securities than investors had anticipated on Thursday, pushing 10-year yields to the cusp of 5%. Asian government bonds followed Treasuries lower.
Australia’s three-year yield jumped as much as 20 basis points to 5.05%, its highest level since 2011, while New Zealand’s two-year yield climbed 25 basis points. The US 10-year yield was little changed at 4.96% on Friday after surging 12 basis points in US trading.
There were still some positive pockets in the markets. Oracle Corp. shares gained in extended trading after the company reported faster growth in its cloud-computing business than analysts had projected. US stock futures also ticked higher. “It’s a broad risk-off move across Asian markets,” said Mohit Mirpuri, a partner at SGMC Capital Pte in Singapore.
“The continued selloff in bonds and the US 10-year yield now flirting with 5% are naturally weighing on risk assets. With US CPI due later today, investors are understandably reluctant to take much risk.”
