Asian stocks were set for declines, tracking a tech-led Wall Street selloff after hotter-than-expected US inflation fueled bets on more aggressive Federal Reserve rate hikes.

Equity-index futures for Japan, South Korea and Australia fell, putting a regional stock gauge on course for a fourth straight day of declines. US equity futures edged lower in early Asian trading after the S&P 500 dropped 1.1% and the Nasdaq 100 suffered its steepest loss since late July. The Russell 2000 entered a correction.

Technology shares bore the brunt of the selloff as higher rate expectations added to concerns over lofty valuations and the enormous cost of building artificial-intelligence infrastructure. A closely watched gauge of semiconductor stocks including Nvidia Corp. and Broadcom Inc. extended a six-day slide to 11.6%.

The fastest US inflation in five months prompted traders to ramp up bets on further Fed tightening, raising the prospect of additional rate hikes even if policymakers pause in October. The shift threatens to keep pressure on technology shares and other rate-sensitive assets, while supporting the dollar.

“An October rate hike is back on the table. With broadening inflation pressures becoming more evident in today’s CPI report, the Fed is increasingly at risk of falling behind the curve in containing inflation,” wrote Ronald Temple, chief market strategist for Lazard’s Financial Advisory and Asset Management businesses.

Treasuries recovered most of their initial inflation-driven losses as the stock selloff spurred demand for bonds near multiyear-high yields. The two-year yield jumped as much as 16 basis points before ending two basis points higher, while the five-year topped 5.15% for the first time since 2007. The 10-year yield fell two basis points to 5.19%.

The dollar rose to its highest in more than a year, extending its longest weekly winning streak since early 2025 as traders ramped up Fed tightening bets. Markets now price about 40 basis points of hikes by the end of January, with the odds of an October move also rising.

“It’s clear as ever that inflation is stubborn and moving in the wrong direction,” said Skyler Weinand at Regan Capital. “While we expect the Fed to pause on any rate changes in October, we expect rate hikes to resume in December.”Precious metals tumbled as the inflation surprise pushed rate expectations higher. Gold slumped, silver fell to its lowest since July 20, and platinum and palladium also declined.

Elsewhere, US oil inched higher in early Asian trading as escalating hostilities from Russia to the Middle East threatened supply flows that had only recently recovered toward pre-war levels.

Brent settled above $106 a barrel after Iran-backed Houthi rebels launched missile and drone strikes across Saudi Arabia, including an attack that damaged Saudi Aramco’s headquarters. The strikes added to an escalation in Iranian attacks on tankers in the Strait of Hormuz, threatening the recovery in Gulf supply.

“Developments over the past week are yet another reminder that recovering flows are not the same as secure flows,” said Emily Ashford, head of energy research at Standard Chartered Bank. “With both infrastructure and shipping increasingly vulnerable, the risk premium is proving difficult to unwind.”Some of the main moves in markets: This story was produced with the assistance of Bloomberg Automation.