Asian Stocks Fall, Oil Jumps as Warsh Flags Inflation Concern and US-Iran Conflict Flares

  • Asian stocks fell as Kevin Warsh’s comments increased expectations of a US rate hike.
  • Both main crude contracts gained more than 2% after renewed US-Iran strikes.
  • Fed officials will assess jobs data this week and CPI next week before deciding.

Asian stocks fell on Monday after Kevin Warsh raised expectations of a US interest-rate increase by warning that inflation remains too high and financial conditions may not be restrictive enough. Inflation is currently at 3.7%, nearly double the Federal Reserve’s 2% target. Oil prices also jumped more than 2% after the United States attacked Iranian rocket launchers on Larak island in the Strait of Hormuz and Iran retaliated against US military targets in Jordan. The renewed fighting revived supply-disruption concerns around the waterway, through which about one-fifth of global crude and gas passes, while the conflict has hindered the Fed’s efforts to contain inflation. Tokyo, Seoul, Hong Kong, Shanghai, Taipei and Jakarta declined, led by technology stocks, while Singapore and Wellington edged higher. Markets are now focused on US jobs data this week and the consumer price index next week ahead of the Fed’s decision. Separately, prediction-market pricing for crude reaching a new all-time high by December 31 rose to 13% from 12% a day earlier.

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