Asian stocks fall to nearly a year low as rally in oil fuels inflation fears

SINGAPORE, Oct. 5 (Reuters) – Asian stocks followed a wide sell-off on Wall Street to weaken for a third straight session on Tuesday, as investors feared oil prices hitting multi-year highs would add to inflationary pressures caused by supply chain disruptions.

US and European equity futures edged up, with S&P 500 e-minis increasing 0.01%, pan-regional Euro Stoxx 50 futures gaining 0.2 and FTSE futures gaining 0.4 %.

The largest MSCI index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) fell 1.3%, declining for a third consecutive session. Japanese stocks (.N225) were down 2.5%, South Korea (.KS11) was down 2%, and Australia (.AXJO) was down 0.4%.

“Investors are clearly worried about inflation due to supply chain disruptions and rising energy prices,” said Vasu Menon, executive director of investment strategy at OCBC Bank.

The market decline took MSCI’s main benchmark to 619.77, the lowest since November 2020, but it reduced losses by 0.6% as Asian trading ended. The index has lost more than 5% this year, with the Hong Kong and Japanese markets among the big losers.

“We’ve seen tech stocks outperform value stocks, so if inflation is still a concern, then tech stocks tend to be affected,” Menon said.

Oil prices hit a three-year high on Monday after OPEC + confirmed it will stick to its current production policy as demand for petroleum products rebounds, despite pressure from some countries for an increase most important of production.

Highlighting the rise in commodity prices, the Refinitiv / CoreCommodity CRB (.TRCCRB) index hit 233.08 on Monday, the highest in more than six years. US oil held steady at $ 77.68 a barrel, a day after hitting its highest level since 2014. Brent crude stood at $ 81.5 after hitting a three-year high.

“OPEC + could inadvertently drive oil prices even higher, adding to an energy crisis that mainly reflects the very tight gas and coal markets,” said Vivek Dhar, commodities analyst at Commonwealth Bank. of Australia.

“This potentially threatens the global economic recovery, just as growth in global demand for oil accelerates as economies reopen thanks to rising vaccination rates,” Dhar said in a note.

The Asian market focused on whether struggling real estate developer China Evergrande (3333.HK) would offer respite to investors looking for signs of an asset divestiture.

Shares of the world’s largest indebted developer were suspended on Monday, but more and more Chinese real estate developers have faced rating downgrades over concerns over their ability to repay debt. Read more

The Dow Jones Industrial Average (.DJI) fell 0.94% to 34,002.92, the S&P 500 (.SPX) lost 1.30% to 4,300.46, and the Nasdaq Composite (.IXIC) fell by 2.14% to 14,255.49 as investors ditched Big Tech stocks in the face of rising Treasury yields.

Yields on the US Treasury rose on investor caution about the need to raise the government debt ceiling as the US faces the risk of a historic default in two weeks. Read more

The US dollar traded near a one-year high against its major peers ahead of major US wage data due at the end of the week. The jobs data could offer clues about the timing of a decline in Federal Reserve stimulus and the start of interest rate hikes.

The dollar index, which tracks the greenback against a basket of six currencies, rose 0.20% to 94.02.

The euro fell 0.25% to $ 1.1592 while the yen rose 0.29% to $ 111.18

The price of gold fell to $ 1,757 an ounce, after hitting its highest level since September 23 on Monday.

Reporting by Anshuman Daga; Editing by Himani Sarkar & Simon Cameron-Moore

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