- Ugly Selloff Pushes Stocks Down Most Since 2020
- Shares tumble in Tokyo, Sydney as investors reassess rate path
- Yield curve inversion deepens; Bitcoin slumps with risk assets
Asian stocks and bonds tumbled in the wake of the broad-based selloff on Wall Street after hotter-than-expected inflation data fueled bets for jumbo interest-rate hikes by the Federal Reserve. The dollar held its sharp rebound.
Australian and Japanese equity indexes slumped in early trading after US shares had their biggest drop in more than two years, with the S&P 500 falling more than 4% and the Nasdaq 100 slumping more than 5%. Hong Kong stock futures point lower while US contracts edged higher.
The two-year Treasury yield, the most sensitive to policy changes, edged higher in Asia after jumping as much as 22 basis points, pushing it more than 30 basis points above the 10-year rate and deepening an inversion in what is generally a recession warning. Australia’s benchmark 10-year yield jumped about 10 basis points.
The US consumer price index increased 0.1% from July, after no change in the prior month, Labor Department data showed. From a year earlier, prices climbed 8.3%, a slight deceleration but still more than the median estimate of 8.1%. So-called core CPI, which strips out the more volatile food and energy components, also topped forecasts.
The selloff in stocks erased nearly all the gains in the S&P 500’s biggest four-day surge since June. The reversal cast a dark shadow over the debate about the outlook for the global economy and markets. Bank of America Corp.’s latest survey showed the number of investors expecting a recession has reached the highest since May 2020.
A gauge of the dollar held gains after climbing more than 1% on the CPI report. The yen moved away from the key 145 level versus the greenback after Japan’s chief currency official said the government won’t rule out any options for responding to foreign exchange moves. The Korean won dropped 1.5%.
Bitcoin nursed a drop of more than 10% overnight, the biggest decline since cryptocurrencies plunged in June.