Price inflation in the US was higher than expected in January. Even with a mixed picture on Wall Street on Tuesday, the arrows are pointing down on Asian stock markets on Wednesday.
There is a broad decline on the most important exchanges in Asia and the Pacific region on Wednesday morning. The Hong Kong stock exchange and the Seoul stock exchange experience the heaviest falls, while developments are more cautious in Shanghai and Tokyo.
This is what it looks like around 6:00 a.m. Norwegian time:
- The Nikkei 225 index in Tokyo falls 0.43 percent
- The Hang Seng in Hong Kong falls 1.13 percent
- The Shanghai Composite falls 0.31 percent
- Kospi in Seoul falls 1.40 percent
- FTSE Straits Times i Singapore faller 0,91
- The ASX 200 in Sydney falls 1.03 percent
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The development in Asia comes after fresh US inflation figures came out on Tuesday, which are followed closely by markets worldwide.
Price inflation in the USA moderated to 6.4 per cent in January. This was nevertheless a higher level than the analysts had envisaged. Core inflation, which ignores food and energy prices, also came in higher than expected.
The US stock markets reacted by wobbling after the release of the figures. Yesterday finally ended mixed on Wall Street, and with an increase for the technology index Nasdaq.
The arrows nevertheless point downward in Asia the following day. At the same time as the decline in Asia, there is admittedly a decline in pre-trade on Wall Street.
Fed chiefs open to ‘doing more’
Concern about the high inflation and interest rate hikes to bring it down, especially as the measures taken by the US central bank (Fed), have had a strong impact on the stock markets in the past year.
Several US central bank leaders have spoken out after the latest inflation figures came out. Thomas Barkin, the Richmond Fed chief, said in a Bloomberg interview that one may have to “do more” if inflation remains well above the two percent target.
Lorie Logan, Fed chief in Dallas, stated that one must be prepared to continue with interest rate increases longer than usual if necessary, according to Bloomberg. The head of the Fed in Philadelphia, Patrick Harker, believes that the interest rate must exceed five percent in the US, and that how much more will depend on the economic data.
The central bank has previously announced that it envisages an interest rate peak in the US of 5.1 per cent this year. The interest rate range in the country is 4.5–4.75 per cent today.
Buffet eases out TSMC shares
Elsewhere in Asia, the large Taiwanese chip manufacturer TSMC falls on the stock exchange in Taiwan.
It happens after it became clear that the well-known investor Warren Buffett has disposed of large parts of his shares in the company. His investment firm Berkshire Hathaway sold $3.7 billion worth of TSMC shares last quarter, given an average price, according to Bloombergs calculations.
The sale comes relatively shortly after Buffet bought 60 million TSMC shares for $3.3 billion in the third quarter. Berkshire Hathaway is now sitting on 86 percent fewer TSMC shares.
TSMC shares are down around four percent in Taiwan.