US inflation fears trigger declines across regional markets

Regional markets tumbled yesterday following a session of carnage on Wall Street triggered by fears that inflation would stay high for longer than expected.

The ignition switch was hit when United States inflation numbers for August came in on the high side, raising the spectre that the Federal Reserve will hike interest rates with even more aggression.

That sparked the biggest falls on Wall Street since June 2020, although the bloodshed was relatively more contained here with the Straits Times Index (STI) restricting losses to 0.97 per cent or 32 points, and closing at 3,258.02.

Losers, to no-one's surprise, outstripped gainers 312 to 184, with 1.19 billion shares worth $1.03 billion changing hands.

Other markets in the region did not fare so well: Japan's Nikkei 225 index tumbled 2.8 per cent, Hong Kong's Hang Seng Index dropped 2.5 per cent, South Korea's Kospi fell 1.6 per cent while Malaysian shares lost 1.3 per cent.

Australian stocks plunged 2.58 per cent - the worst fall in around three months - wiping $53 billion off the market value.

"The hotter-than-expected print for both US headline and core inflation in August delivered a negative shock to Wall Street overnight, by suggesting that pricing pressures are not moderating as fast as expected while overturning hopes of a quicker Federal Reserve policy pivot," said IG market strategist Yeap Jun Rong.

"Rate hike expectations were being ramped up after the data, with markets now fully pricing for a 75-basis-point hike next week."

Jardine Cycle & Carriage was the lone winner among blue-chip stocks here, rising 0.3 per cent to $34.92, while the STI's biggest loser was Venture Corp, down 2.4 per cent to $17.46.

The most heavily traded counter on the STI was Singtel, which lost 1.1 per cent to $2.70, with 26.4 million shares traded.

The local banks all finished lower: DBS lost 0.9 per cent to $33.32; OCBC slipped 0.4 per cent to $12.22; and UOB dropped 1 per cent to $27.28.