Asia-Pacific Markets React to US Inflation Data, Hong Kong Stands Strong
The Asia-Pacific markets experienced a mixed day on Wednesday, with most markets falling in response to hotter-than-expected U.S. inflation data. However, Hong Kong managed to buck the trend and emerge as the exception to the downturn. The news of the U.S. consumer price index climbing 3.1% on a 12-month basis and 0.3% for the month sent shockwaves through Wall Street, resulting in a tumble overnight.
Economists had predicted a more modest increase of 0.2% month over month in January and 2.9% on an annual basis. The core prices, which exclude volatile food and energy components, rose even higher, with a 0.4% increase month over month and a staggering 3.9% increase from a year ago. These figures exceeded expectations, as economists had projected a 0.3% increase in core CPI for January and a 3.7% increase from the previous year.
Despite this unsettling news, Hong Kong’s Hang Seng index managed to reverse losses and gain 0.96%. The city’s return to trade after the Lunar New Year holiday likely contributed to this resilience. Meanwhile, mainland Chinese markets remained closed for the week.
In Japan, the Nikkei 225 retreated from its recent 34-year highs, falling 0.69% to end at 37,703.32. The broader Topix index saw an even larger loss of 1.05%, closing at 2,584.59. Just a day earlier, the Nikkei had experienced a significant rally, briefly surpassing the 38,000 mark for the first time since 1990.
Masato Kanda, Japan’s top currency diplomat, expressed concern over the rapid movements in the foreign exchange market, particularly regarding the yen. Authorities are closely monitoring these developments with a high sense of urgency, according to Reuters.
South Korea’s Kospi also experienced a decline, dropping 1.1% to close at 2,620.42. Samsung Electronics, a heavyweight in the market, saw a 1.6% loss. However, the small-cap Kosdaq managed to return to positive territory and gained 0.96%, ending the day at 853.3.
In Australia, the S&P/ASX 200 continued its losing streak for a third consecutive day, sliding 0.87% to close at 7,537.7.
The impact of the U.S. inflation data was felt across the Pacific, as all three major indexes in the United States experienced losses overnight. The Dow Jones Industrial Average fell 1.35%, marking its worst session since March 2023 on a percentage basis. The S&P 500 slid 1.37%, while the Nasdaq Composite took a larger hit, falling 1.8% to settle at 15,655.60.
As markets continue to react to economic data and global events, investors are keeping a close eye on inflation rates and their potential impact on various sectors. The Asia-Pacific region, like the rest of the world, remains vulnerable to market fluctuations and will undoubtedly be closely monitoring future developments.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.
