SINGAPORE: Emerging Asian stocks and currencies extended losses on Friday as surging oil prices raised inflation concerns, ahead of US inflation data later in the day.
The MSCI EM Asia equities index fell 1.6percent to a one-week low, while a gauge of ASEAN stocks hit a one-month low.
Brent crude rose to a four-month high of USD109.97 a barrel after surging 6percent overnight, raising inflation risks and expectations that interest rate cuts could be delayed. Global bonds sold off, sending yields sharply higher.
Yields on 10-year government bonds across emerging Asia extended their rise, with India’s reaching 7.022percent, the highest since early June. Malaysia’s benchmark yield hovered near a three-year high, while Thailand’s touched its highest level since early June.
Among regional equities, net energy importers South Korea and Taiwan ended down 1.8percent and 1.6percent, respectively.
Singapore stocks fell as much as 0.4percent to a three-week low, tracking losses for a fifth consecutive session. Stocks of other regional energy-dependent countries such as Thailand and Philippines declined 0.9percent each.
Jakarta stocks tanked 1.9percent to a two-week low, and stocks in Kuala Lumpur dropped as much as 1.2percent to the lowest since mid-July.
Currencies extended declines, with the MSCI gauge of emerging market currencies falling 0.2percent.
The Malaysian ringgit weakened to 4.063 a dollar, and the Taiwan dollar hit its lowest in a week at 31.698 a dollar. The rupiah also weakened 0.3percent to 17,590 a dollar, while the peso edged higher. The Singapore dollar was flat and the Thai baht edged higher.The won strengthened to as much as 1,344.24 per dollar.
“…Asia forex and rates markets have been quite benign so far despite the rise in US Treasury yields, but given the drivers of markets more recently we think the probabilities are that this resilience may not continue at least in the near-term,” Michael Wan, a senior currency analyst with MUFG, said in a note.
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