Asian Shares Mixed As Inflation And Fed Worries Mount

(RTTNews) - Asian stocks ended mixed on Monday as Middle East tensions persisted, hawkish signals from Federal Reserve policymakers bolstered the case for another Fed rate hike this year, and new data showed China's industrial profit growth slowed further in August. Oil prices and bond yields extended their climb as U.S. President Donald Trump rejected Iran's latest proposal to reopen the Strait of Hormuz and signaled possible new military strikes after midterm elections.

While Trump said he expects negotiations to resume this week. Iran said it would not soften its conditions. Iran's Foreign Minister Abbas Araghchi expressed hopes for a diplomatic solution, but warned the country is prepared for war with the United States to resume.

The U.S. dollar index was on the defensive but held near a two-month high, while gold tumbled nearly 3 percent toward $4,150 an ounce on higher yields and hawkish bets.

Brent crude prices soared nearly 3 percent to trade above $107 a barrel in Asian trade on renewed concerns about energy supply.

China's Shanghai Composite index fell 1.67 percent to 3,823.62 after data showed China's industrial profits grew at their weakest pace this year in August, expanding just 4.2 percent from a year earlier.

Hong Kong' Hang Seng index rose 0.54 percent to 24,642.51, rebounding from three consecutive sessions of losses as China confirmed a two-month extension of the trade truce with the U.S. following a recent summit.

Japanese markets closed lower after a gauge of Japan's service-sector inflation rose in August at the fastest annual pace in more than two years and minutes from the Bank of Japan's July 30 to 31 meeting revealed broad agreement on rising inflation risks, raising speculation the central bank could raise its benchmark rate for a second straight month when the board meets in October.

The Nikkei average closed 0.73 percent lower at 65,877.62, giving up early gains and snapping a five-session winning streak. The broader Topix index settled 0.40 percent lower at 4,112.

Memory-chip maker Kioxia Holdings and electronics firm Ibiden both slumped over 4 percent ahead of quarterly results from U.S. memory-chip maker Micron Technology due this week.

Seoul stocks plummeted as trading resumed after a holiday. The Kospi index plunged 2.70 percent to 6,889.74, with technology stocks coming under heavy selling pressure on concerns about a sharp rise in long-term U.S. Treasury yields and worsening sentiment toward parts of the artificial intelligence supply chain.

Samsung Electronics slumped 5.4 percent and SK Hynix lost a little over 5 percent in their first trading session after the Chuseok holiday.

Australian markets edged up slightly, with financials rising ahead of a widely expected 25-bps RBA rate cut on Tuesday. The benchmark S&P/ASX 200 inched up 0.17 percent to 8,679.70 while the broader All Ordinaries index finished marginally higher at 8,850.70.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index ended 0.14 percent higher at 13,830.68, halting some of the losses from the previous session.

U.S. stocks closed higher on Friday and notched their first weekly gain in the last three as oil prices pulled back on reports about a potential deal to end the prolonged U.S.-Iran conflict, helping ease pressure on Treasury yields that had recently surged to multi-decade highs.

It was said that Iran has submitted a proposal to the U.S. to end the war and reopen the Strait of Hormuz within seven days if Washington accepts its conditions.

The yield on the 10-year Treasury briefly jumped to 5.22 percent earlier in the day after a survey showed U.S. consumer sentiment has fallen to a four-month low in September due to rising inflation fears, with year-ahead inflation expectations rising to 4.6 percent in September, the highest reading since June and up from 3.4 percent before the Iran conflict began.

The S&P 500 rose half a percent to snap a three-day losing streak. The Dow advanced 0.9 percent and the tech-heavy Nasdaq gained half a percent.