Asian stocks, gold slide as hot US CPI lifts Fed hike bets

Asian stock markets opened lower on Thursday, October 15, and gold slid after US consumer prices rose faster than expected in September. The data raised bets that the Federal Reserve could raise interest rates again as soon as later this month.

MSCI's broadest index of Asia-Pacific shares outside Japan fell in early trading. South Korea's Kospi led the losses with a drop of more than 5%, and Japan's Nikkei 225 also fell, according to Australian Associated Press. "Asia faces another difficult session," said Chris Weston, head of research at Pepperstone. He pointed to "renewed technology weakness, with leveraged ETF flows and AI infrastructure credit risk firmly in focus".canberratimes.com.au

Inflation beats forecasts

The Bureau of Labor Statistics said on Wednesday that its consumer price index rose 0.6% in September, the biggest monthly gain in five months. Prices were up 3.7% from a year earlier. Economists had expected an annual rate of 3.6%, up from 3.4% in August. Core inflation, which leaves out food and energy, rose to 2.6% against a forecast of 2.5%. Gasoline prices drove more than half of the increase.investopedia.com+2

On Wall Street, stocks fell for a third straight day. The S&P 500 dropped 1.1% and the Nasdaq Composite lost 1.9%, their biggest one-day falls since late July. The Dow Jones Industrial Average dipped 0.1%. AI stocks took the heaviest losses. Oracle ↘ 8.83% and CoreWeave ↘ 15.46% fell sharply, and the Philadelphia SE Semiconductor Index PHLX Semiconductor Index ↘ 4.25% declined for a sixth session in a row. "While the initial selloff was triggered by the hotter-than-expected CPI, tech was the main driver," JPMorgan ↗ 1.16% analysts wrote.reuters.com+1

Rate hike bets rise

The CME Group's ↗ 2.72% FedWatch tool showed traders pricing roughly a one-in-three chance of a 25-basis-point rate hike at the Fed's October 28 meeting, up from 22% before the report. Estimates ranged from 31.6% to 37% depending on the time of measurement. The Fed raised rates in September for the first time since 2023.straitstimes.com+2

Higher borrowing costs hurt gold because it pays no interest. Gold fell as much as 2.1% as the dollar strengthened, while silver dropped to its lowest level since July 20.straitstimes.com

What comes next

Later on Thursday, investors will get US producer price and retail sales data, along with third-quarter results from TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 3.40%. Fed Chair Kevin Warsh is scheduled to speak in Bangkok alongside IMF Managing Director Kristalina Georgieva.canberratimes.com.au+1

Bart Melek of TD Securities The Toronto-Dominion Bank ↘ 0.27% said further disruptions to Middle East oil supplies linked to the Iran war "would no doubt drive rate expectations sharply higher." In that case, he said, gold "could drift materially below US$3,900 per ounce".straitstimes.com