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Asian Markets Down, Following Wall street Steep Decline

Major Asia-Pacific stock markets declined on Thursday, as Wall Street fell sharply with inflation data triggering fears of a rate hike.

Mainland Chinese markets fell in the morning. The Shanghai Composite was down 0.74%, and the Shenzhen component dipped 0.59%. Hong Kong’s Hang Seng index fell nearly 1%.

Asia markets
Hang Seng Index Performance Chart

In Japan, the Nikkei 225 plummeted 1.8%, while the Topix fell 0.8%. Shares of Softbank Group dropped more than 6% after the company declined to extend its buyback program.

Australia’s S&P/ASX 200 edged down 0.59% as major banking stocks traded mixed.

Over in South Korea, the Kospi dipped 0.7%.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost about 0.83%.

Markets in India, Malaysia, Singapore and the Philippines were closed due to holidays.

U.S. stocks slumped overnight as key inflation data showed higher-than-expected price pressures.

The Dow fell 681 points, or 1.99% lower, to notch its single-worst session since January. The blue-chip index clinched its worst day since February on Tuesday. The S&P 500 lost 2.1%, its biggest one-day drop since February, while the tech-heavy Nasdaq Composite slid 2.6%.

The Labor Department reported that the prices American consumers pay for goods and services accelerated at their fastest pace since 2008 last month with the Consumer Price Index spiking 4.2% from a year ago.

“Market reaction to the CPI numbers was swift … The fear for the equity market is the Fed lifting rates aggressively if there is some notion of the Fed being behind the curve as some like Summers have argued.” Tapas Strickland of National Australia Bank

The Fed has said it would tolerate inflation that rises above its 2% target and that will look at a range of inflation as acceptable. But the concern is that inflation could become too hot and the Fed would be forced to raise interest rates and keep raising them, a negative for stocks.

Asian Markets Currencies and Oil

The U.S. dollar index, which tracks the greenback against a basket of its peers was at 90.761, up slightly from earlier.

The Japanese yen weakened, trading at 109.67 per dollar, as compared to levels around 108 earlier this week. The Australian dollar slipped, trading at $0.7716 against the dollar, from around $0.78 reached in the previous session.

Oil prices declined on Thursday during Asian trading hours. U.S. crude futures edged down 0.98% to $65.43 per barrel and global benchmark Brent dipped 0.94% to $68.67