Asian stocks slammed by CPI shock, Nikkei retreats from 34-year high
Investing.com-- Most Asian shares tumbled on Wednesday, tracking an overnight decline on Wall Street after sticky U.S. inflation data spurred renewed concerns over higher for longer interest rates.
Japan’s Nikkei 225 fell 0.8% as investors locked-in profits at 34-year highs, while technology-heavy indexes clocked steep declines on extended profit-taking in the sector.
Wall Street indexes tumbled from record highs in overnight trade, as U.S. consumer price index (CPI) inflation read hotter-than-expected for January. The reading gave more credence to warnings from Fed officials that sticky inflation will see the bank keep rates higher for longer.
Dow Jones Futures fell 0.1% in Asian trade, while S&P 500 futures and Nasdaq 100 Futures were muted.
Among Asian bourses, tech-heavy indexes logged the steepest gains, given that the sector is the most vulnerable to higher rates. Hong Kong’s Hang Seng index sank 1% as it resumed trade after the Lunar New Year holiday, while South Korea’s KOSPI tumbled 1.5% as investors locked-in recent profits in heavyweight chipmakers.
Nikkei losses limited as dovish BOJ bets remain in play
Despite Wednesday’s losses, the Nikkei 225 still remained well in sight of a potential record high at above 38,000 points, as losses were limited by the prospect of a dovish Bank of Japan.
A top BOJ official recently signaled that while the bank will likely raise interest rates this year, it will do so at a slow pace, which allows local businesses to continue benefiting from a relatively low-rate environment. Ultra-low Japanese interest rates were a key driver of the Nikkei's stellar rally through 2023.
Stocks which had seen a strong run-up over the past two sessions were among the biggest decliners on
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