Asian Shares Slump As Inflation Fears Mount

Asian stocks plummeted on Thursday and the dollar held near a two-decade high after the latest U.S. inflation data strengthened the Fed’s resolve to continue hiking rates by 50 basis points for at least three meetings.

U.S. inflation edged down to an 8.3 percent annual rate in April but remained close to the fastest pace in four decades, overnight data showed.

Chinese shares fluctuated before ending slightly lower and the yuan slipped to a 19-month trough amid tightening Covid rules and extended lockdowns.

The benchmark Shanghai Composite index slid 0.12 percent to 3,054.99. Hong Kong’s Hang Seng index ended 2.24 percent lower at 19,380.34. Chinese developer Sunac China Holdings failed to meet its final deadline for a U.S.-currency bond coupon payment.

The Hong Kong Monetary Authority intervened in the currency market after the Hong Kong dollar fell to the weak end of its 7.75-to-7.85 per greenback.

Japan’s Nikkei index fell 1.77 percent to 25,748.72, marking its lowest level in nearly two months on worries about high inflation and tightening monetary policies.

Tech stocks tracked their U.S. peers lower, with SoftBank Group shares falling more than 8 percent. Tokyo Electron, KDDI and Advantest lost 2-4 percent. Mitsubishi Motor surged 6.2 percent and Olympus soared 11.2 percent on posting strong earnings.

Australian markets hit a five-month low, hit by losses in the technology sector. Block Inc shares plunged 17.6 percent and Xero nosedived 11.6 percent. Mining and energy stocks also fell broadly as commodity prices weakened on growth and inflation worries.

Lender Commonwealth Bank of Australia rose 0.6 percent after its third-quarter cash earnings beat estimates. The benchmark S&P/ASX 200 dropped 1.75 percent to finish at 6,941.

New Zealand’s benchmark S&P/NZX 50 index dipped half a percent to 11,177.36 after data showed inflation expectations in the country rose further in the second quarter, adding to signs the central bank will keep raising interest rates.

Seoul stocks hit an 18-month low and the won extended its retreat on inflation woes. The Kospi average fell 1.63 percent to 2,550.08, extending losses for the eighth day and marking the lowest level since Nov. 19, 2020. Large-cap stock such as Samsung Electronics, SK Hynix and Hyundai Motor all fell over 1 percent.

U.S. stocks saw much volatility before ending sharply lower at their lowest closing levels in over a year overnight as data showed inflation in April rose more than expected to 8.3 percent, raising expectations for aggressive policy tightening and stoking concerns over a possible recession.

The S&P 500 shed 1.7 percent to log its fourth loss in five sessions and the Dow lost 1 percent, while the tech-heavy Nasdaq Composite tumbled as much as 3.2 percent.