Asian Stocks, Follow Wall St Lower Amid Inflation Pressure

Asian stocks markets followed Wall Street lower on Friday after higher-than-expected US inflation dashed hopes the Federal Reserve might ease away from more interest rate hikes. Shanghai, Tokyo, Hong Kong and Sydney declined. Oil edged higher. Wall Street's benchmark S and P 500 index lost 1.1 per cent on Thursday, adding to declines since this week's release of government data showing August inflation stayed near a four-decade high despite four interest rate hikes this year to slow the economy.

On Thursday, US government data showed unemployment claims last week declined while August consumer sales rose. That gives ammunition to Federal Reserve officials who say the economy can tolerate more rate hikes. Wall Street's decline indicates "no sign of relief for risk sentiments" while the job market data "provided the go-ahead for further tightening" in monetary policy, Yeap Jun Rong of IG said in a report.

The Shanghai Composite index lost 1 per cent to 3,166.77 after official data showed Chinese consumer and factory activity improved in August but still were weak. Housing sales fell 30 per cent from a year earlier under pressure from a government crackdown on debt. The Nikkei 225 in Tokyo sank 1.1 per cent to 27,581.36 and the Hang Seng in Hong Kong retreated 0.5 per cent to 18,829.43. The Kospi in Seoul shed 1 per cent to 2,377.69 and Sydney's S and P-ASX 200 was 1.5 per cent lower at 6,742.90.

India's Sensex opened down 1 per cent at 59,311.07. New Zealand and Southeast Asian markets declined. On Wall Street, the S and P 500 declined to 3,901.35 on Thursday after the Labour Department said the number of applications for unemployment benefits last week fell to a four-month low. The market benchmark is down 4.1 per cent for the week following the biggest pullback in two years on Tuesday after the government reported US consumer prices rose 8.3 per cent from a year earlier and 0.1 per cent compared with July.

The overall figure was down from June's 9.1 per cent peak, but core inflation, which strips out volatile food and energy prices to give a clearer picture of the trend, rose to 0.6 per cent over the previous month, up from July's 0.3 per cent increase. Traders worry aggressive interest rate hikes by the Federal Reserve and central banks in Europe and Asia to control price rises might derail global economic growth.

Two of the Fed's rate hikes this year have been by 0.75 percentage points, triple its usual margin, and traders expect a similar increase this month. Fed chair Jerome Powell said in August that rates would stay elevated for some time until the US central bank is sure inflation is under control. The Dow Jones Industrial Average fell 0.6 per cent to 30,961.82. The Nasdaq slid 1.4 per cent to 11,552.36.

Retail sales data gave a mixed view of how American consumers are coping with inflation. Sales rose by an unexpectedly strong 0.3 per cent in August after falling 0.4 per cent in July. Railroad operators mostly edged higher after a tentative labour agreement was reached, averting a disruptive strike. Union Pacific rose 0.2 per cent and Norfolk Southern gained 0.3 per cent.

CSX fell 3.4 per cent. In energy markets, benchmark US crude rose 24 cents to USD 85.34 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell USD 3.38 on Thursday to USD 85.10. Brent crude, the price basis for international oil trading, gained 38 cents to USD 91.22 23 per barrel in London. It lost USD 3.26 the previous session to USD 90.84. The dollar declined to 143.33 yen from Thursday's 143.49 yen. The euro edged down to 99.90 cents from 99.91 cents.

(PTI)