TOKYO/TAIPEI — Asian stock markets dropped further on Thursday morning, extending a run of losses as investors fret over rising global inflation.
A sharp jump in U.S. consumer prices fueled market concerns over inflation and a possible rise in interest rates. April’s 4.2% year-on-year rise in the consumer price index was the sharpest since 2008.
Following falls on Wall Street on Wednesday, Asian indexes also moved lower as investors turned away from the tech stocks that have underpinned a market rally for much of the past year.
Rising inflation is seen as particularly bad for tech stocks, whose appeal to investors depends more on expected future earnings.
In Japan the equity benchmark Nikkei Stock Average is headed for a three day losing streak, with the index at one point falling over 600 points, or 2.2%, hitting the lowest intraday level since early January. The broader Topix index dropped 1%, while the startup concentrated Mothers index slipped 2%.
Shares in SoftBank Group fell over 8%, hitting their lowest intraday level in over three months, with investors worried about the valuations of the tech stocks in its portfolio. The fall came a day after the tech investor reported record annual earnings for a Japanese company of almost $46 billion, buoyed by gains on its investments over the past 12 months.
Other Asian benchmarks also fell. In Taiwan, where the tech-heavy market fell more than 8% at one stage on Wednesday and ended the day down more than 4%, losses continued on Thursday before the Taiex eased back into positive territory on the day.
The benchmark has sunk close to 10% since its recent high in late April as COVID-19 worries dampen the island’s economic outlook and weigh on investor sentiment. As the number of domestic infections rises, Taiwan’s health authorities have warned that the strictest social restrictions the island has imposed during the pandemic could be on the way.
South Korea’s Kospi index was down close to 2% in early morning trade before trimming its decline to about 0.4%.
Hong Kong’s Hang Seng Index declined 1.1%, trimming gains for the year to 2.5%, and is on course for its fifth fall in seven sessions. Only 14 of the index’s 55 components rose in early trade.
Declines were led by tech stocks, with Alibaba Group Holding sliding 2% and Tencent Holdings slipping 1.5%.
China’s CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, was down 1%. Ping An Insurance Group dropped 0.9% and spirits maker Kweichow Moutai fell 0.6%
The MSCI Asia Pacific Index fell 1.4% and is near the lowest level for the year.
“A recovery environment with rising inflation should benefit cyclical sectors, such as financials, materials and industrial companies,” said Tai Hui, Chief Asia Market Strategist, J.P. Morgan Asset Management. “Hence, the pressure on tech and health care could continue for some time.”
Additional reporting by Narayanan Somasundaram in Hong Kong
