Asian shares hit by tech slump as sticky inflation raises Fed fears By Investing.com

By Amber Warrick

Investing.com — Most Asian stock markets fell on Wednesday after stronger-than-expected U.S. inflation raised fears of more hawkish action from the Federal Reserve.

Regional tech stocks were also under pressure as Warren Buffett’s Berkshire Hathaway (NYSE: ) shed a large stake in chipmaker Taiwan Semiconductor Manufacturing Corp. (TW: ) and increased its stake in Apple Inc (NASDAQ: ).

TSMC fell more than 3% and was the biggest weight on the index, down 1.6%. The index was the worst performing Asian bourse for the day.

Other tech-heavy indexes also posted heavy losses, with Hong Kong’s index down 1.3%, South Korea losing 1.2%.

Broader Asian stock markets also retreated, with China and indices losing 0.3% and 0.4% respectively.

Sentiment for risk-heavy assets was dented by better-than-expected U.S. data in January, which showed that inflation remained strong despite rising interest rates.

The reading gives the Fed more incentive to keep hiking interest rates in the near term, which threatens to attract foreign capital flows from Asian markets. Regional central banks are expected to raise rates in line with the Fed’s tightening of liquidity conditions.

The prospect of higher interest rates raises the prospect of a U.S. recession this year, reflecting investor anger over a slowdown in short-term output growth.

In the year Asian stocks posted their biggest losses in 2022 as the Fed began aggressive rate hikes and have struggled so far this year. Moderate economic indicators from China weighed on regional sentiment with hopes of a gradual recovery in Asia’s largest economy.

Japan’s index fell 0.5%, as investors weighed on uncertainty over domestic monetary policy after the government unexpectedly picked economist Kazuo Ueda as the next Bank of Japan governor.

Seen as a wild card pick, Yuda is expected to adopt an informed approach to managing monetary policy.

Australia’s index sank 1%, with heavyweight banking stocks weighing heavily on A.

The country’s biggest lender, CBA, posted a record interim profit but warned that the country’s credit situation is slowing due to high interest rates and inflation.