Asian stocks were battered on Friday, with risk-off sentiment in full swing amid sharp falls in the price of commodities and growing expectations that the Federal Reserve is on track for a rate hike in December for the first time in nearly a decade
Crude prices hit two-and-a-half-month lows on Thursday after the U.S. government reported a stockpile build four times above market expectations. West Texas Intermediate crude was last seen 0.5 percent lower at $41.55 a barrel in Asian trade.
"We blame China's economic data for the latest drop in commodity prices, [especially] in copper. The close relation between the CRB index and the U.S. dollar broke down in June. The subsequent 9.6 percent decline in the CRB looks outsized against the 2.0 percent rally in the dollar index. We infer that China growth uncertainty displaced dollar as the driver of commodity prices," Tim Condon, head of research for Asia at ING Financial Markets, wrote in a note released Friday.
As such, major U.S. averages slumped more than 1 percent each overnight, as investors eyed several speeches from Fed officials that hinted at an interest-rate hike next month. Wall Street posted its worst day since September 28, with the S&P 500 ending lower year-to-date for the first time since October 22 and the Dow Jones Industrial Average off more than 250 points.
"Markets have been mulling over the [October] nonfarm payrolls numbers all week, but the big selloff we have been seeing in the past 24 hours seems indicative that they have come to a conclusion: they're not happy about it. A rate hike by the Fed in December seems almost palpable now, and markets are still scrambling to reposition themselves ahead of it," IG's market analyst Angus Nicholson said.