Asian markets in the Asia-Pacific region followed the downward trend set by Wall Street after the release of higher-than-anticipated U.S. inflation data for January. The Consumer Price Index (CPI) climbed 3.1% on a 12-month basis and 0.3% for the month, surpassing the predictions made by economists polled by Dow Jones. These experts had expected a 0.2% month-over-month increase in the CPI for January and a 2.9% annual increase. Additionally, core prices, which exclude volatile food and energy components, rose 0.4% month over month and 3.9% from the previous year. The anticipated increases for core CPI were 0.3% and 3.7%, respectively. The Asian markets responded to this unexpected inflationary pressure with caution.
One of the hardest-hit markets in the region was Hong Kong, where the Hang Seng index dropped 1.7% at the opening bell. The decline can be attributed to the resumption of trading after the Lunar New Year holiday. Investors in Hong Kong were particularly mindful of the inflation data from the United States, leading to the initial selloff. The negative sentiment continued to prevail throughout the day.
Nikkei 225 Retreats from Recent High
Japan’s Nikkei 225 also experienced a fall of 0.78% as it retreated from its 34-year highs. Meanwhile, the Topix saw even larger losses, declining by 1.21%. The Nikkei had briefly breached the 38,000 mark on Tuesday, rallying about 3%. However, the index was unable to maintain this momentum and fell back. The last time the Nikkei touched that level was in 1990. Additionally, Masato Kanda, Japan’s top currency diplomat, expressed concern about the rapid movements in the foreign exchange market, particularly regarding the yen. Japanese authorities are closely monitoring the situation with a high sense of urgency.
South Korea and Australia Also Slide
South Korea’s Kospi dropped 1.17%, with multinational technology company Samsung Electronics experiencing a nearly 2% decline. The small-cap Kosdaq also fell, losing 0.81% of its value. In Australia, the S&P/ASX 200 extended its losing streak to three days, sliding 1.05%. The negative sentiment in these markets was consistent with the overall reaction to the higher-than-expected inflation data from the United States.
The negative sentiment in the Asian markets was largely influenced by the performance of Wall Street. Following the release of the inflation data, all three major U.S. indexes experienced losses. The Dow Jones Industrial Average fell 1.35%, marking its worst session in terms of percentage since March 2023. The S&P 500 slid 1.37%, while the tech-heavy Nasdaq Composite fell 1.8% to settle at 15,655.60. This decline in U.S. stocks had a ripple effect across Asia-Pacific markets and contributed to the cautious stance of investors.
The release of higher-than-expected U.S. inflation data had a notable impact on the Asia-Pacific markets. Hong Kong, Japan, South Korea, and Australia all experienced declines, reflecting the cautious sentiment among investors. The negative performance of Wall Street added to the overall market downturn. As market participants continue to monitor inflationary pressures, further volatility can be expected in the near future.
Leave a Reply