BEIJING (AP) – Asian stock markets followed Wall Street lower for a second day on Thursday after unexpected increases in consumer prices in the United States fueled concerns that inflation could dampen the economic recovery.
Market references in Shanghai, Tokyo, Hong Kong and Southeast Asia declined.
Overnight, the Wall Street S&P 500 benchmark recorded its biggest one-day decline since February, after consumer prices rose in April at their fastest annual pace since 2008.
The price hike reflects growth in industrial activity and consumers after last year’s global shutdown to fight the coronavirus pandemic. But investors fear that soaring inflation could disrupt the recovery or cause central banks to withdraw stimulus measures and near zero interest rates.
The market reaction has been “subdued, reflecting the belief that this rise in inflation will eventually subside,” Tai Hui of JP Morgan Asset Management said in a report.
The Federal Reserve believes this surge should be temporary, but “if inflation does not calm down” the challenge to the credibility of the US central bank “could be disruptive,” Hui said.
The Shanghai Composite Index fell 0.6% to 3,441.37 and the Nikkei 225 in Tokyo fell 1.8% to 28,628.73. The Hang Seng in Hong Kong lost 0.8% to 28,010.86.
Seoul’s Kospi fell 0.1% to 3,158.88 and Sydney’s S & P-ASX 200 was down 0.4% to 7,018.00. New Zealand also pulled back.
On Wall Street, the S&P 500 lost 2.1% to 4,063.04. The Dow Jones Industrial Average lost 2% to 33,587.66 in its biggest drop since January. The Nasdaq fell 2.7% in its biggest pullback since March.
Apple, Microsoft and Amazon all fell more than 2%. Tesla fell 4.4%, taking its decline this month to almost 17%.
Bond yields, or the difference between the market price and the payment at maturity, rose as prices fell. Bond prices fall if investors fear the value of this payment will be eroded by higher inflation.
The yield on the 10-year Treasury bill fell to 1.69% from Tuesday’s 1.62%, a big move.
In energy markets, benchmark US crude fell 46 cents to $ 65.62 per barrel on electronic trading on the New York Mercantile Exchange. The contract rose 80 cents on Wednesday to $ 66.08. Brent, used for the price of international oils, sank 53 cents to $ 68.79 a barrel in London. It rose 77 cents the previous session to $ 69.32 a barrel.
The dollar gained 109.67 yen against 109.60 yen on Wednesday. The euro edged up to $ 1.2083 from $ 1.2080.