Asian stock markets fell sharply as price hikes in the US raised fears that the Federal Reserve would take stricter action to rein in inflation.
At the same time, the US dollar strengthened to 135 Japanese yen for the first time in two decades. As official data on Friday showed, US inflation hit a 40-year high last month.
A warning in Beijing about a Covid-19 infection added to investor concerns about global economic growth.
On Monday, Japan’s benchmark Nikkei index ended the day down just over 3%. The Hang Seng in Hong Kong closed down 3.4%, while the Kospi in South Korea closed down 3.3%. The Australian stock market was closed due to a public holiday for the Queen’s birthday.
Global oil prices have also fallen by almost $2 to Brent crude to more than $120 a barrel. At the same time, the Indian rupee has fallen below the US dollar’s 78 to a new record low.
Meanwhile, bitcoin fell below $25,000 to its lowest level since December 2020.
On Friday, official data showed US prices rose faster than expected in the previous month, as rising energy and food costs pushed inflation to the highest level since 1981.
The annual inflation rate rose to 8.6% in May, the Labor Department said, following the easing in April. This confused hopes that inflation was peaking and alerted investors that the Federal Reserve could take more robust action to tackle the issue.
The central bank is scheduled to announce its following policy on Wednesday.