Asia report: Markets fall further as inflation fears linger

Markets in Asia continued the global trend downwards on Thursday, following another sell-off on Wall Street overnight amid concerns that rising inflation could see central banks hike interest rates.

In Japan, the Nikkei 225 was down 2.49% at 27,448.01, as the yen strengthened 0.13% against the dollar to last trade at JPY 109.53.

Of the major components on the benchmark index, robotics specialist Fanuc was down 1.62%, Uniqlo owner Fast Retailing lost 3.25%, and technology giant SoftBank Group plunged 7.77%.

SoftBank’s losses came after the company decided against extending its share buyback programme, Reuters reported.

The broader Topix index was 1.54% weaker by the end of trading in Tokyo, closing at 1,849.04.

On the mainland, the Shanghai Composite was 0.96% weaker at 3,429.54, and the smaller, technology-heavy Shenzhen Composite lost 0.81% to settle at 2,253.30.

South Korea’s Kospi was off 1.25% at 3,122.11, while the Hang Seng Index in Hong Kong slid 1.81% to 27,718.67.

The blue-chip technology stocks were in the red in Seoul, with Samsung Electronics down 1.88% and SK Hynix losing 1.67%.

Sentiment was knocked even further overnight, after data out of the United States showed inflation there running much hotter than expected.

Prices jumped 4.2% year-on-year in April, which was the fastest pace in more than 12 years.

The Federal Reserve has said that it would accept inflation above its 2% target given the current, precarious global economic situation as a result of the Covid-19 pandemic.

Fears of rapid inflation globally were stoked earlier in the week after factory gate prices leapt higher in China as well.

“Yesterday’s US inflation shock fuelled the growing belief that central banks will have to take action sooner rather than later when it comes to raising interest rates,” said AJ Bell investment director Russ Mould.

“The world wanted economic recovery, but it appears to be happening too fast and the actions required to cool it down aren’t favourable to stock markets.”

Mould said the tech-heavy Nasdaq index was in danger of seeing all of its year-to-date gains wiped out.

“It is now only trading 2.6% higher since the start of January and pre-market indicative prices would suggest it is in store for another red day today.”

Oil prices were lower as the region went to bed, with Brent crude last down 2.31% at $67.72, and West Texas Intermediate falling 2.42% to $64.48.

In Australia, the S&P/ASX 200 slipped 0.88% to 6,982.70, with the hefty financials subindex losing 0.38% as banking stocks were mixed.

Among the country’s big four banks, Westpac Banking Corporation closed flat, while Australian and New Zealand Banking Group rose 0.85%, Commonwealth Bank of Australia added 0.43%, and National Australia Bank eked out gains of 0.08%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 1.08% weaker at 12,428.12, led lower by cinema technology company Vista Group, which was off 5.2%.

The down under dollars were in a mixed state against the greenback, with the Aussie last trading 0.13% weaker at AUD 1.2962, while the Kiwi strengthened 0.02% to NZD 1.3967.