Asian markets news: Stocks slide on US rate worries, dollar ascendant

Japan's Nikkei (.N225) sagged a milder 0.2 per cent. Image: Reuters

Asian markets news: 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 the highest 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 per cent.

Brent crude stayed above $90 amid tightening supply, adding to inflation worries.

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MSCI's broadest index of Asia-Pacific shares (.MIAP00000PUS) slid 0.45 per cent, following declines on Wall Street and in Europe.

Hong Kong's Hang Seng (.HSI) dropped nearly 1 per cent. Mainland Chinese blue chips (.CSI300) sank 0.8 per cent. Australia's benchmark (.AXJO) lost 1.1 per cent.

Japan's Nikkei (.N225) sagged a milder 0.2 per cent, although that put it at risk of snapping an eight-session win streak.

US stock futures pointed to a 0.1 per cent decline, following a 0.7 per cent slide for the S&P 500 (.SPX) overnight.

Wall Street stocks sold off after US data showed the services sector unexpectedly picked up steam in August, suggesting stubborn inflationary forces.

While traders are still fairly certain the Federal Reserve will forego a rate hike 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 - was flat at 104.85 after jumping to the highest since March 15 on Wednesday at 105.03.

The dollar earlier touched the highest since Nov. 4 versus the yen at 147.875 .

The currency pair tends to move in step with long-term Treasury yields , which stood at 4.29 per cent on Thursday after pushing to the highest since Aug. 23 at 4.306 per cent in the previous session.

The euro , meanwhile, was little changed at $1.0724, following its dip to a three-month trough of $1.0703 on Wednesday.

Elsewhere, the People's Bank of China continued its bid to shore up the yuan by again setting strong official midpoints for the currency.

Despite those efforts, the yuan continues to hover on the weaker side of the closely watched 7.3 per dollar level in offshore trading, last changing hands at 7.3274. It sank to the lowest since early November at 7.3490 in the middle of last month, undercut by a rapidly deteriorating property sector and the risk of spillover into broader markets.

China trade data released Thursday, while not as dire as economists predicted, still showed a nearly 9 per cent slide in exports and a more than 7 per cent drop for imports.

The Australian dollar , which often trades as a proxy for its top trading partner, eased 0.2 per cent to $0.6371, keeping it close to this week's 10-month low.

Crude continued its steady climb of the past two weeks, edging higher amid expectations of a fall in US inventories, after Saudi Arabia and Russia earlier this week extended voluntary supply cuts to year-end.

Brent crude futures edged up 12 cents to $90.72 a barrel, while US West Texas Intermediate crude (WTI) futures gained 11 cents to $87.65.

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