Inflation concerns weighed on Asian Stocks Fall as OPEC+ announced cuts to oil output targets, leading to a surge in oil prices. Brent crude climbed over 6% to $85.3 per barrel, further complicating the inflation outlook. In addition, Monday’s economic data showed a slump in U.S. manufacturing activity in March, resulting in new orders plunging and tighter credit conditions. The rate-sensitive sector of the economy, like the auto industry, could decline further due to the credit conditions.
Despite early gains, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped by 0.4%. Meanwhile, Japan’s Nikkei stock index rose by 0.3%, and the Australian stock market edged up. China’s blue-chip CSI300 Index remained unchanged, and the Shanghai Composite Index gained 0.22%. Hong Kong’s Hang Seng index fell by 1.1%, led by technology Asian Stocks Fall due to the elevated Sino-U.S. tensions.
The surprise production cuts by OPEC+ could push oil prices towards $100 a barrel, which could lead to higher inflation and add to Wall Street’s inflation worries. The energy sector index of the S&P 500 surged by 4.9%. However, the prospect of higher oil costs added to inflation worries just days after evidence of cooling prices raised expectations that the U.S. Federal Reserve might soon end its aggressive monetary tightening campaign. The Dow Jones Industrial Average rose by 0.98%, the S&P 500 gained 0.37%, and the Nasdaq Composite dropped 0.27%.
Asian Stocks Fall On Worries Over Inflation
The U.S. dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was last up at 102.16. The European single currency remained flat on the day at $1.0893, having gained 0.5% in a month while the dollar rose 0.2% against the Japanese yen at 132.68. The yield on benchmark 10-year Treasury notes retreated to 3.4151%, while the two-year yield touched 3.9676%.
In the RBA, the Aussie was volatile and last down 0.4% against the greenback at $0.6758. The focus on currencies in Asian Stocks Fall on the RBA, which paused its tightening streak as financial markets had anticipated, though economists were more divided on the outcome. Finally, spot gold was traded at $1980.59 per ounce, and the dollar reversed some losses but remained on the defensive after losing ground on Monday in the wake of the weak U.S. economic data.