SINGAPORE: Asian stocks fell on Thursday (Jun 11), weighed down by a Wall Street selloff after a hotter-than-expected US 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 per cent, led by a 3 per cent drop in South Korea's KOSPI. S&P 500 e-mini futures were 0.3 per cent lower.Japan's Nikkei share average was down 1.3 per cent at 63,360.96, as of 0046 GMT (8.46am Singapore time). Earlier in the session, the benchmark fell as much as nearly 3 per cent, slipping below the 63,000 level for the first time since May 22. The broader Topix slid 1.6 per cent to 3,787.08The 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 per cent to US$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 per cent with the Nasdaq Composite 2.0 per cent 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 US$93.10 a barrel, up US$1.65 or 1.8 per cent, 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 US 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 per cent probability that the Federal Reserve's next hike will come at its two-day meeting on Oct 28, compared to a 50.1 per cent 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 per cent.Bitcoin was down 0.5 per cent at US$61,445.19, while ether was 0.6 per cent lower at US$1,619.04, as the upcoming SpaceX IPO drove a rotation out of cryptocurrencies and other speculative assets. Gold was off 0.3 per cent at US$4,059.59.
