Asian stocks declined as US inflation accelerated, influenced by rising oil prices following the conflict in Iran. This prompted an increase in Treasury yields and boosted bets on a Federal Reserve rate hike in 2027. Elevated oil prices and inflation risks now threaten the recent equity rebound, particularly impacting chipmakers.

Global Market Today: Asian stocks track Wall Street lower on US CPI

Synopsis

Asian stocks declined as US inflation accelerated, influenced by rising oil prices following the conflict in Iran. This prompted an increase in Treasury yields and boosted bets on a Federal Reserve rate hike in 2027. Elevated oil prices and inflation risks now threaten the recent equity rebound, particularly impacting chipmakers.

Asian stocks dropped following losses on Wall Street as US inflation quickened, showing the impact of higher oil prices since the war in Iran started.

The MSCI Asia Pacific Index fell 0.4% with South Korean shares declining 2.4%. US equity-index futures also slipped after the S&P 500 Index and the Nasdaq 100 Index retreated on Tuesday, with a gauge of chipmakers slumping 3% following a record-breaking rally.

S&P 500 Top Gainers

Zebra Technologies241.79(11.44%)

Qnity Electronics168.46(9.93%)

Humana295.35(7.69%)

Centene59.31(5.23%)

S&P 500 Top Losers

Qualcomm210.31(-11.46%)

Coterra Energy32.56(-8.62%)

Intel120.61(-6.82%)

Skyworks Solutions66.31(-5.45%)

A faster-than-estimated rise in the core US consumer price index spurred an increase in Treasury yields during the US session, with traders boosting bets on a Federal Reserve interest-rate hike in 2027. Brent crude edged lower to hold at over $107 barrel on Wednesday, following three consecutive days of gains.

Elevated oil prices and mounting inflation risks are threatening to derail the blistering rebound in equities from their war-driven lows, a rally fueled by gains in semiconductor stocks and robust earnings from megacap tech companies. The surge in chipmakers has already prompted calls for a pause, as the conflict in Iran clouds the outlook for growth while adding to price pressures.

“Strong US CPI raises the possibility of a more hawkish stance from the Fed, with rising US yields seen as a headwind for equities,” said Kazunori Tatebe, chief strategist at Daiwa Asset Management. “It’s concerning that this could intensify pressure on growth stocks, such as AI and semiconductors, which have been leading the market.”

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US inflation accelerated in April on rising gasoline and grocery costs, exceeding wage growth in a double-whammy for already strained consumers. The CPI rose 3.8% from a year earlier, the most since 2023. The core gauge, which excludes food and energy, increased 2.8%. A gauge of the dollar advanced for a second session on Tuesday.

Treasuries fell as rising oil prices threatened to keep inflation at levels that could prompt the Fed to raise rates next year. The US 30-year yield reached 5.02%, within two basis points of this year’s high, while two-year yields traded at about 4% during the US session.

“Inflation is roaring back — largely driven by stubbornly high oil prices — which will dominate the inflation story for the rest of the year as the conflict continues to unfold in the Middle East,” said Skyler Weinand at Regan Capital.

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