
- Asian stocks track the overnight fall on Wall Street amid concerns about oil-driven inflation.
- The US PPI lifted September Fed rate hike and dents investors’ appetite for riskier assets.
- US-Iran tensions keep the geopolitical risk premium in play and further weigh on sentiment.
Asian stocks declined sharply on Friday, tracking the overnight fall on Wall Street, as a surge in energy prices and a global bond selloff trigger the broader risk-off move.
Crude oil prices shot to the highest level on May 21 as increasing attacks along key shipping routes in the Middle East fuel fears of a prolonged disruption to supplies. In fact, Iran-backed Houthis in Yemen seized the crucial Red Sea city of Mocha, expanding its control over the strategic Bab al-Mandeb Strait. This comes as shipping traffic through the Strait of Hormuz remains restricted due to the US-Iran standoff and continues to act as a tailwind for oil prices.
In further developments, the US Treasury plans to sanction a large, undisclosed bank on Monday as part of its ongoing economic pressure campaign against Iran. Meanwhile, US President Donald Trump said that the Iran war will likely continue until after the November midterm elections, keeping geopolitical risk premium in play and supporting oil prices. This might continue to fuel energy-driven inflation worries and weigh on investors’ sentiment.
Meanwhile, the US Bureau of Labor Statistics (BLS) reported on Thursday that the headline Producer Price Index (PPI) rose to a 5.4% YoY rate in August, compared to the previous month’s upwardly revised print of 4.8%. Stripping out food and energy, the core gauge matched forecasts and rose 4.6% YoY from 4.3% in July. This prompted traders to add to bets on a Federal Reserve (Fed) rate hike next week and further dented investors’ appetite for riskier assets.






