TOKYO, March 15 — Asian stocks slumped today, tracking tech-led declines on Wall Street after hotter-than-forecast US inflation knocked back bets for how soon and often the Federal Reserve will cut interest rates.

US benchmark bond yields held near the 4.3 per cent level they reached yesterday for the first time this month, following their biggest jump in three months. The dollar advanced to its highest since March 5 against a basket of major peers.

Crude oil slipped back after its overnight surge above US$85 for the first time since November, and remained on track for a rally of nearly 4 per cent this week.

Bitcoin edged away from an all-time high reached yesterday, as risk sentiment took a hit.

A bigger-than-expected rise in producer prices in US data overnight added to a heated reading on consumer inflation earlier in the week to see futures markets cutting the odds of a June policy easing to 60 per cent, from about 67 per cent late on Wednesday, according to LSEG’s rate probability app.

For 2024, the market is now pricing in less than three rate cuts, down from three to four roughly two weeks ago.

The biggest reaction was in the US Treasury bond market, with a pop in yields pulling the dollar along as well.

The 10-year Treasury yield last stood around 4.28 per cent on Friday, holding on to most of its more than 10 basis point jump from the previous session.

The dollar index, which measures the currency against the euro, yen and four other peers, added 0.07 per cent to 103.45, following a 0.58 per cent rally on Thursday, its best day in more than a month.

“At the margins, price pressures are looking more stubborn, with the process of disinflation taking longer than hoped,” said Kyle Rodda, senior markets analyst at Capital.com.

The direct impact on equities was muted, but the jump in long-term yields is “raising the spectre of a potential air pocket ahead for the tech-driven rally,” he said.

US stock futures pointed marginally lower following a 0.29 per cent decline in the S&P 500 on Thursday. However, the impact of a big sell off in chip-sector shares reverberated in Asian markets, weighing on stock indexes around the region.

Hong Kong’s Hang Seng Index slid more than 2 per cent, as did South Korea’s Kospi, which fell 1.6 per cent.

Mainland Chinese blue chips, were likewise bruised and edged 0.6 per cent lower. China’s central bank left a key policy rate unchanged while withdrawing cash from a medium-term policy loan operation today.

Japan’s Nikkei eased 0.33 per cent.

Signs continue to build for an exit from ultra-easy stimulus at the Bank of Japan’s two-day policy meeting ending on Tuesday of next week.

The government appeared to back a policy shift, with Finance Minister Shunichi Suzuki stating today that the economy is no longer in deflation, despite saying earlier in the week that it was too soon to declare an end to the nation’s protracted spiral of falling prices.

Jiji news agency reported yesterday that the BOJ has started to make arrangements to end its negative interest rate policy at the gathering. Sources have told Reuters that the central bank will debate the end of negative rates if the preliminary survey on big firms’ wage talks, due today, yields strong results.

Japan’s 10-year bond yield rose to 0.795 per cent for the first time in more than three months.

Any yen strength was overpowered by the resurgent dollar, which gained 0.03 per cent to ¥148.35, continuing its rebound from a drop as low as 146.48 a week ago.

The euro extended yesterday's decline and reached a low of US$1.08735, its lowest level in a week. Last Friday, it climbed as high as US$1.0980, a two-month high.

In cryptocurrencies, bitcoin was last 4.6 per cent lower at US$67,417, having hit a record high of US$73,192.79 in the previous session.

Software firm MicroStrategy announced plans this week to raise capital through convertible bonds, offering to buy bitcoin for the second time in less than 10 days.

Elsewhere, oil prices succumbed to some profit taking today, following strong gains this week amid sharp declines in US crude and fuel inventories, drone strikes on Russian refineries and a rise in energy demand forecasts. O/R

Brent crude oil futures for May fell 18 cents, or 0.21 per cent, to US$85.24 a barrel. US West Texas Intermediate (WTI) crude for April fell 17 cents, or 0.2 per cent, to US$81.10. — Reuters