Asia Shares Drop Sharply after Hot U.S. Inflation Data

Asia-Pacific shares fell sharply at the open on Wednesday as Wall Street indices ended with steep declines following a higher-than-expected August U.S. consumer price index report.

As of 9.32 a.m. Thai time, Japan’s Nikkei 225 dropped 2.14% in early trade, and the Kospi in South Korea lost 1.46%.

In Australia, the S&P/ASX 200 slid 2.60%, while Hang Seng index in Hong Kong was 2.03% lower. 

In mainland China, the Shanghai Composite down 0.48%.

The Bureau of Labor Statistics showed on Tuesday the U.S. inflation rate increased more than anticipated in August, as higher housing and food prices offset a decline in petroleum prices.

Across a wide range of goods and services, the consumer price index (CPI) rose 0.1% month over month and 8.3% year over year. Excluding volatile food and energy expenses, CPI increased 0.6% from July and 6.3% from the same month in 2021.

Prior to the announcement of inflation data, the market expected inflation to pass its peak while lowering the possibility of a 75bps rate hike from the Federal Reserve later this month. However, after an unexpected inflation data that missed economists’ forecast, the market is now 100% priced in for a 75bps hike, while the economic indicator pointed to a 21% probability of a full percentage point rise.