Asia stocks follow overnight US equities plunge after US inflation stokes fears of more aggressive interest-rate hikes

All 73 members of the Hang Seng Index but four drop as the index slumps 2.5 per cent after US inflation accelerates at a faster-than-estimated pace

Benchmarks in Japan and Australia fall by more than 2 per cent on the back of the biggest declines in US stocks in more than two years

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A man walks past a billboard showing the Hang Seng Index in Hong Kong on September 1, 2022. Photo: EPA-EFE

Published: 10:18am, 14 Sep 2022Updated: 4:34pm, 14 Sep 2022

Stocks fell across Asia, taking cues from an overnight rout in US equities after a report that showed untamed American inflation stoked fears that the Federal Reserve will be more aggressive with interest-rate increases, dimming the outlook for global growth.

The Hang Seng Index slumped 2.5 per cent to 18,847.10 at the close on Wednesday, the biggest decline since July 11. The Hang Seng Tech Index sank 2.9 per cent, while the Shanghai Composite Index lost 0.8 per cent.

All 73 Hang Seng Index members but four fell. Power tool maker Techtronic Industries shed 10 per cent to HK$89.10 and Chinese search engine operator Baidu lost 5.7 per cent to HK$128.40. Alibaba Group Holding sank 4.5 per cent to HK$87.10, while Wuxi Biologics slid 4.9 per cent to HK$50.80, extending a 20 per cent slump a day earlier sparked by concern about more competition from the US in bio-manufacturing.

The sell-off also swept Asia’s other major markets, with benchmarks in Japan and Australia falling by more than 2 per cent and South Korea’s Kospi retreating 1.6 per cent. That came on heels of tumultuous trading in the US that sent the major equities plunging by the most in more than two years. Traders shifted to haven assets, pushing the dollar index by 1.4 per cent to near a two-decade high.

US consumer prices rose 8.3 per cent in August, according to the Labor Department, topping the median estimate of 8.1 per cent. So-called core inflation, which excludes the more volatile food and energy components, also exceeded projections.

The data dealt a blow to traders who had chased a stock rebound on hopes that inflation had peaked. Derivative traders have increased bets that the Fed will raise borrowing costs by 75 basis points later this month, with some even expecting a full percentage-point increase.