Asian stocks, bonds slump over global rates angst
Asian stocks were a sea of red on Thursday and bonds slid on bets global interest rates would stay higher for longer, as investors looked to key inflation readings at the end of the week for further clues on the future path of monetary policy.
The dollar rode U.S. Treasury yields higher while gold remained under pressure on renewed expectations that the Federal Reserve is unlikely to cut rates any time soon.
The latest halt in the global risk rally has come on the back of data pointing to lingering inflationary pressures across major economies.
«Hotter and stickier than expected global inflation appears to be taking the air out of asset markets,» said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank. «Equities slid and bonds swooned, and USD swaggered.»
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5%, tracking a negative lead from Wall Street and extending its 1.6% decline from the previous session.
Japan's Nikkei tumbled more than 1.5%, while U.S. and European futures similarly fell. EUROSTOXX 50 futures eased 0.18% while S&P 500 futures dipped 0.35%.
Nasdaq futures slumped 0.45%.
A Fed survey on Wednesday showed U.S. economic activity continued to expand from early April through mid-May but firms grew more pessimistic about the future while inflation increased at a modest pace.
Across the Atlantic, data the same day showed German inflation rose slightly more than forecast to 2.8% in May, ahead of the wider euro zone bloc's reading on Friday.
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