Oil Price Surge Sparks Global Market Selloff and Inflation Fears
Surging oil prices have sent shockwaves through global markets, sparking fears of inflation and prompting investors to scramble for safety. The price of Brent crude hit a four-month high of $109.97 per barrel on Friday, only to fall back slightly due to selling pressure.
The surge in oil prices has raised the stakes for US consumer price data for August, which is set to be released later in the day. Forecasts suggest a 0.2% monthly rise in core CPI, but risks are skewed towards a higher number as PPI data showed some stickiness.
Central banks around the world are responding to the threat of inflation by raising interest rates. The European Central Bank hiked rates overnight for the second time this year, and officials see more tightening ahead with October in play.
The US Treasury yield climbed to a three-year high on Friday, reaching 4.9790%, while Japan's 10-year government bond yields rose to 2.98%. Asian stocks slumped as higher bond yields raised the discount rates used for corporate valuations.