Hang Seng Falls 1.6 Percent as Hot US Inflation Deepens Asia Selloff

Hong Kong shares fell hard on Thursday, October 15, as a selloff that started on Wall Street spread across Asia. The Hang Seng Index fell 1.61 percent to 23,954.01, down from 24,345.22.

The trigger came from the United States. Consumer price inflation rose faster than expected in September, and traders lifted their bets that the Federal Reserve will raise rates again this year. Reuters reported that the odds of a 25 basis point hike at the Fed meeting on October 28 rose to 31.6 percent, up from 22.1 percent a day earlier, according to the CME FedWatch tool.

Tech shares took the worst of it. An earlier Hong Kong report put the Hang Seng 1.2 percent lower at around 24,030, with Tencent down 1.8 percent, Lenovo down 8.8 percent, Kingboard Laminates down 5.8 percent, Z.AI down 6.3 percent and SMIC down 4.0 percent. Dow Jones reported the Hang Seng tech gauge fell 2.2 percent in morning trade.

The selloff was regional

Asia fell together. Reuters reported the MSCI index of Asia Pacific shares outside Japan fell 1.2 percent, led by South Korea. Dow Jones put the Kospi down 7.8 percent in morning trade, the Nikkei down 4.4 percent and the Shanghai Composite down 1.5 percent. Chip shares stayed under pressure, and investors waited for TSMC earnings for a clearer read on semiconductor demand.

Wall Street had set the tone overnight. Reuters reported the S and P 500 fell 1.1 percent and the Nasdaq Composite fell 1.9 percent, in a third straight day of declines. A gauge of semiconductor stocks fell for a sixth day. AI linked shares such as Oracle and CoreWeave fell as higher borrowing costs hit the data center buildout.

Oil gave little relief. Brent crude eased to around 104.67 dollars a barrel, one market report said, but tension near the Strait of Hormuz kept energy supply and inflation worries alive.

Why it matters

Hong Kong sits between Wall Street and mainland China, so it feels a US rates shock fast. Higher US rates pull money toward the dollar and toward safe US debt. That leaves less money for Asian shares, and it hits growth and tech stocks first.

What happens next

Traders now watch US producer price data for the next read on inflation, and TSMC earnings for the next read on chip demand. The Fed decision on October 28 is the hard date. If inflation data stay hot, the rate hike bets that drove this selloff will grow. If the data cool, Asia could recover part of the loss, as it did after earlier selloffs this month.