TOKYO- Asian stocks sank on Thursday, extending global equity declines after new signs of sustained inflationary pressures in the United States boosted the case for elevated interest rates for longer.
The US dollar hung close to its highest point since mid-March against major peers, and touched a fresh 10-month top to the yen. Long-term Treasury yields hovered near two-week highs near 4.3 percent .
Brent crude stayed above $90 amid tightening supply, adding to inflation worries.
MSCI’s broadest index of Asia-Pacific shares slid 0.68 percent after declines on Wall Street and in Europe.
Hong Kong’s Hang Seng and an index of mainland Chinese blue chips eached dropped about 1 percent . Australia’s benchmark lost 1.24 percent .
Japan’s Nikkei sagged 0.64 percent , on course to snap an eight-session win streak.
US stock futures pointed to a 0.2 percent decline after a 0.7 percent slide for the S&P 500 overnight.
German DAX futures were down 0.36 percent and UK FTSE futures slipped 0.26 percent .
Wall Street stocks sold off after US data showed the services sector unexpectedly picked up steam in August, suggesting stubborn inflationary forces.
Although traders are still fairly certain the Federal Reserve will forego a rate increase this month, they put the risk of one by year-end at closer to a coin toss. A rate cut is not expected until June.
“The data doesn’t flip the script, but it shows the war against inflation hasn’t been won,” said Kyle Rodda, senior financial markets analyst at Capital.com in Melbourne.
“It all goes back to the discussion of where that magical neutral rate happens to be,” he said. “While the markets are still feeling around for where that rate may be, it’s going to weigh on equities and support the US dollar.”
The dollar index – which measures the currency against six developed-market peers, including the yen and euro – ticked up 0.07 percent to 104.93. It jumped to the highest since March 15 on Wednesday at 105.03.
The dollar earlier reached its strongest level since Nov. 4 versus the yen at 147.875.
