Stocks fell in Asia on Thursday as US stocks fell under the weight of higher bond market yields, with the Dow Jones Industrial Average losing more than 400 points.
Tokyo's Nikkei 225 index fell 1.3% to 38,054.13 and Hong Kong's Hang Seng fell 1.4% to 18,217.83.
The Shanghai Composite index gave up early gains, losing 0.6% to 3,091.68.
The Australian S&The P/ASX 200 fell 0.5% to 7,628.20, while Seoul's Kospi fell 1.6% to 2,635.44.
Taiwan's Taiex lost 1.4% and India's Sensex was 0.5% lower.
“Global inflation is warmer and more persistent than expected and appears to be taking the air out of asset markets,” Mizuho Bank said in a commentary. “In other words, 'Goldilocks' is undone. And concerns about the negative impact on demand from higher tariffs trickling down,” the report said.
On Wednesday the S&The P500 fell 0.7% to 5,266.95, paring gains for May, which was on track to be the best month since November. Four of the five stocks in the index fell.
The Dow Jones index lost 1.1% to 38,441.54 and the Nasdaq index fell 0.6% to 16,920.58 after setting its latest all-time high.
American Airlines Group led a slump for airline stocks after cutting earnings expectations and other financial targets for the spring. The carrier said fuel costs may be slightly lower than previously thought, but that would also likely be a key revenue trend. Shares fell 13.5%.
ConocoPhillips fell 3.1% after announcing it would buy Marathon Oil in an all-stock deal, valuing the company at $22.5 billion, including $5.4 billion in net debt. It's the latest big deal for an industry that has seen several buyout announcements of late. Marathon oil rose 8.4%.
Advance Auto Parts fell 11% after results and revenue for the latest quarter came in just below analyst expectations.
A fresh rise in longer-term Treasury yields also weighed on the stock market, with the 10-year yield rising to 4.61% from 4.54% late Tuesday after an auction of $44 billion of seven-year Treasury notes.
The 10-year yield is still falling this month, but has been slowly rising since falling below 4.40% in mid-May. Higher yields on government bonds have a negative impact on the prices of all types of investments.
This month's swings in interest rates also came as traders recalibrated their expectations for when the Federal Reserve could start cutting its key interest rate, which is at the highest level in more than two decades.
With inflation stubbornly higher, traders have had to postpone their overly optimistic forecasts for rate cuts several times this year.
The Fed is trying to accomplish the balancing act of putting just enough pressure on the economy through high interest rates to fully control inflation, but not so much that it leads to widespread layoffs.
A Fed report released Wednesday said businesses and other contacts across the country have learned that consumers are resisting further price increases. That, in turn, hurts companies' profits as their out-of-pocket costs for insurance and other expenses continue to rise.
Despite concerns about bursts in spending among U.S. consumers, especially those with lower incomes, BNP Paribas economists expect a healthy labor market, slowing inflation and even gains from some investors in cryptocurrencies to help support the economy's main engine.
US stocks continue to set records despite concerns that interest rates remain high, partly as stocks related to artificial intelligence technology continue to rise. Nvidia's last big earnings report added to the frenzy. After a brief dip in morning trading, the price rose 0.8% on Thursday, the most modest gain since the earnings report.
In other trades, U.S. benchmark crude lost 29 cents to $78.94 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, fell 35 cents to $83.08 a barrel.
The US dollar fell from 157.65 yen to 156.61 Japanese yen. The euro fell from $1.0803 to $1.0797.
