Asian Stocks Slide Amid Slower US Inflation and Elevated Bond Yields

Asian stocks were subdued on Thursday as investors weighed the implications of slower-than-expected US inflation data in August, which reduces the likelihood of a Federal Reserve rate hike this month.

The MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2%, with South Korea's KOSPI easing 0.14%. In contrast, Japan's Nikkei rose over 1% as chip-related shares gained.

Despite blockbuster earnings from AI chipmaker Micron, which failed to lift the mood in Asia, bond yields remained under pressure. The yield on benchmark US 10-year Treasury notes hit 5.306%, its highest level since mid-June 2007.

Saxo's chief investment strategist Charu Chanana noted that markets may increasingly be asking whether we are closer to peak memory shortage, even if demand continues to exceed supply. The macro backdrop is becoming more mixed, with softer US data taking some pressure off Fed expectations and shorter-term yields.