BEIJING—Asian stock markets sank Monday ahead of a US inflation update that traders worry might lead to more interest rate hikes.Traders hope Tuesday’s inflation data will show upward pressure on US prices is easing, which might encourage the Federal Reserve to ease off efforts to cool business activity and hiring. They worry a strong reading after estimates of 2022 inflation were revised up last week would reinforce plans to keep rates high and possibly increase them.
The Kospi in Seoul declined 0.9 percent to 2,447.77 and Sydney’s S&P-ASX 200 shed 0.3 percent to 7,410.30. New Zealand and Singapore retreated while Jakarta gained. Stocks have been rallying since last month on hopes the Fed might start cutting rates as early as late this year. That is despite warnings by Chair Jerome Powell that rates will stay elevated for an extended period until inflation pressures are extinguished.Wall Street raised its forecast of how high the Fed might raise rates after Powell said last week there is a “significant road ahead” to get inflation down to its 2 percent target.
The yield on the 10-year Treasury bond, or the difference between the market price and the payout at maturity, widened to 3.73 percent on Friday from 3.66 percent.