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Stocks & Shares

Asian shares follow Wall Street down


Nikkei 225 dropped 0.8% to 37,646.37, S&P/ASX 200 slipped 1% to 7,526.70, and Kospi dropped 1.3% to 2,616.47

Shares dropped Wednesday in Asia after disappointingly high U.S. inflation data sent stocks slipping on Wall Street, raising prospects that interest rates will remain higher for longer.

Regional market watchers were paying close attention to the outcome of the presidential election in Indonesia, one of Southeast Asia’s biggest economies and a supplier of strategically important resources such as nickel.

Hong Kong’s Hang Seng index resumed trading after the Lunar New Year holiday, rising 0.2% to 15,769.95 after opening lower. Markets in mainland China remain closed all week.

Japan’s benchmark Nikkei 225 dropped 0.8% to 37,646.37. Australia’s S&P/ASX 200 slipped 1% to 7,526.70. South Korea’s Kospi dropped 1.3% to 2,616.47.

Tuesday on Wall Street, the S&P 500 shed 1.4% to 4,953.17 as traders delayed forecasts for when the Federal Reserve will deliver the cuts to interest rates they crave so much. The hotter-than-expected inflation report may mean the first cut would not come in March.

Tuesday’s report from the Labor Department showed that the consumer price index (CPI) advanced 0.3% from December to January, up from a 0.2% rise the earlier month. Compared with a year ago, prices were 3.1% higher.

High interest rates hurt all kinds of investments, and they tend to particularly hurt high-growth stocks such as technology companies. A 2.2% decline for Microsoft and 2.1% dip for Amazon were the two heavy weights on the market.

The losses were widespread, and around 90% of the stocks in the S&P 500 dropped in one of the biggest speed bumps for the index since its big, record-setting rally began in late October.

Much of that rise was due to hopes that inflation was cooling enough for the Federal Reserve to reduce rates and relax the pressure on the economy.

Stocks of smaller companies dropped even more because high rates could hurt them more than bigger rivals by making it more difficult to borrow cash. The Russell 2000 index of smaller stocks slumped 4% for its worst day since two summers ago.

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