Shares retreat as techs extend losses, US strikes on Iran lift oil

SINGAPORE: Asian stocks fell on Thursday, weighed down by a Wall Street selloff after a hotter-than-expected U.S. inflation reading, while renewed US strikes on Iran fuelled a rise in oil prices.

MSCI’s broadest index of ​Asia-Pacific shares outside Japan was down 0.9%, led by a 3% drop in South Korea’s ‌KOSPI. S&P 500 e-mini futures were 0.3% lower.

The United States began a fresh round of strikes against multiple targets in Iran, the US military said on Wednesday, hours after President Donald Trump vowed new attacks if no peace deal is secured. ​Iran announced the closure of the Strait of Hormuz in response.

Brent crude rose 2% to $94.93 a ​barrel as trading resumed in Asia.

Strategists believe that Asian stocks that had rallied hardest ⁠during the past two months are likely to extend recent losses, as markets question whether the sky-high expectations ​for earnings growth that had driven the gains can be maintained.

“Given already stretched valuations, these extreme bullish expectations ​set a vulnerable backdrop for momentum in Korea, Taiwan and the Asia tech sector,” said Rupal Agarwal, Asia quant strategist at Bernstein in Singapore, in a note to clients.

Trimming positions in these stocks would be “most prudent,” she added, noting that “the re-escalation ​on the war front could further accelerate this unwind.”

On Wednesday, the S&P 500 was down 1.6% with the ​Nasdaq Composite 2.0% lower after data showed US inflation accelerated last month at its fastest pace since April 2023, albeit in ‌line ⁠with market expectations. Brent crude prices settled at $93.10 a barrel, up $1.65 or 1.8%, as US President Donald Trump threatened to resume attacks on Iran.

The US dollar index , which measures the greenback’s strength against a basket of six currencies, held steady at 100.03, firmly within the tight trading range it has sat in throughout the past week. ​Safe-haven buying has driven ​the global reserve currency ⁠to its strongest levels since the U.S. and Iran began negotiating a ceasefire in early April.

Meanwhile, market expectations of the timing of the next rate hike moved ​closer, though they remain finely balanced. Fed funds futures are now pricing an ​implied 51.6% probability ⁠that the Federal Reserve’s next hike will come at its two-day meeting on October 28, compared to a 50.1% chance a day earlier that the US central bank would remain on hold until December, according to the CME ⁠Group’s ​FedWatch tool.

The yield on the US 10-year Treasury bond was up ​2.6 basis points at 4.564%.

Bitcoin was down 0.5% at $61,445.19, while ether was 0.6% lower at $1,619.04, as the upcoming SpaceX IPO drove a rotation out ​of cryptocurrencies and other speculative assets.

Gold was off 0.3% at $4,059.59.