Asian Shares Retreat On Inflation Fears

(RTTNews) - Asian stocks fell sharply on Friday following a fourth straight session of losses on Wall Street.

Inflation and interest rate worries weighed on markets after Brent crude prices jumped to their highest level since May on escalating Middle East tensions and a measure of U.S. producer price inflation came in stronger than expected, pushing the probability of a Federal Reserve rate hike next week to 72 percent.

The outlook remains highly uncertain, with risks tilted upward for inflation and downward for growth, European Central Bank (ECB) President Chritine Lagarde warned Thursday after raising three key interest rates by 25 basis points.

All eyes now turn to the U.S. consumer price index reading for August later in the day, with economists projecting headline inflation at 0.4 percent month-on-month and 3.4 percent year-on-year.

The CPI data will be a key input for the Federal Reserve's September 16 interest-rate decision.

The U.S. dollar held gains in Asian trade while gold climbed to $4,353 an ounce, after having hit a one-week low earlier.

Brent crude futures fell more than 2 percent toward $105 a barrel after the Financial Times reported that Iran and Oman were meeting with Gulf states to reopen shipping through the Strait of Hormuz.

It was said that Gulf foreign ministers plan to meet their Iranian counterpart in the Omani coastal city of Salalah this coming Monday to secure a deal to manage commercial shipping through Hormuz.

China's Shanghai Composite index fell 1.18 percent to 3,888.11 while Hong Kong's Hang Seng index dropped 0.60 percent to 24,805.63 on expectations of further U.S. interest-rate hikes.

Japanese markets tumbled on concerns over surging oil prices and rising U.S. Treasury yields. The Nikkei average slumped 1.93 percent to 64,011.34 while the broader Topix index closed 0.65 percent lower at 4,028.30. Kioxia lost 7 percent and Resonac Holdings plummeted 10.7 percent while oil explorer Inpex rose 1.4 percent.

Seoul stocks fell sharply, with tech stocks such as Samsung Electronics and SK Hynix pacing the declines. The Kospi index plunged 1.76 percent to 6,909.91.

Australian markets ended notably lower to end at a more than two-month low as weaker commodity prices weighed on the mining sector. BHP Group shares fell over 4 percent and Rio Tinto gave up 3.5 percent.

The benchmark S&P/ASX 200 dropped 0.89 percent to 8,741.20 while the broader All Ordinaries index closed 0.98 percent lower at 8,920.20.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index fell 0.95 percent to 13,580.33, extending losses from the previous session.

U.S. stocks ended lower for a fourth consecutive session overnight as oil prices climbed further and the yield on the 10-year Treasury note rose above 4.95 percent to its highest level in almost three years on fears of prolonged disruptions to global energy supplies.

Adding to investor anxiety, President Donald Trump said he doesn't think the Iran war will end until after November's midterm elections and that oil prices will not come down until then.

The Wall Street Journal reported, citing U.S. officials that the conflict could drag on through the remainder of his term, which ends in January 2029.

Mixed producer inflation data also weighed on markets. While producer prices increased in line with economist estimates on a monthly basis in August, the annual rate of price growth came in at 5.4 percent, accelerating from July's revised 4.8 percent and surpassing market expectations for 5.1 percent growth.

The Dow and the S&P 500 both dropped around 0.6 percent to reach their lowest closing levels in over a month while the tech-heavy Nasdaq Composite fell 0.7 percent.