Asian Markets Plummet on Oil Price Surge and Inflation Fears

Asian stocks and bonds plummeted on Thursday after a surge in oil prices sparked a selloff in US markets. The MSCI Asia Pacific Index dropped 1.3%, led by losses in Japan and South Korea, following a decline of 0.5% in the S&P 500 Index.

The increase in oil prices to almost $110 a barrel pushed Treasury yields to multiyear highs, putting additional pressure on bonds. The US producer price index rose 0.4% in August from the previous month, the most since May, according to government data.

With the Federal Reserve expected to raise interest rates next week, investors are growing increasingly cautious. 'Yields and oil probably need to come down in order for stocks to work,' said Stephanie Roth, chief economist at Wolfe Research.