Asian stocks catch New York flu


Stock markets across Asia have dropped sharply, reflecting similar falls in the US and

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the EU a day earlier, as fears grew of higher US interest rates.

The Stock Exchange of Thailand index dropped 14 points (1.84%) to end the session at 748.3. The baht slipped more, to 38.21 at the closing of the Bangkok trading day.

The dollar fell back against the yen Thursday after its overnight gain on selling by Japanese exporters and US hedge funds, amid continued concerns about the massive US current account deficit.

The Nikkei fell below the 16,000 mark for the first time in eight weeks and shares dipped by 2.4% during trading. The Japan drop was echoed in Hong Kong, South Korea, Taiwan, Singapore and Australia, with falls of up to 3%.

Higher-than-expected US consumer prices on Wednesday also worried the markets as oil prices boosted inflation. Higher interest rates also make it more expensive for companies to borrow and thereby eat into company profits.

"The market is very afraid of inflation and about the possibility of [US] interest rate increases," said Kim Joong-hyan, a Seoul-based analyst with Goodmorning Shinan Securities.

The higher inflation figures could force the US central bank to raise interest rates further, which could hurt the prospects for economic growth.

"Rather than any domestic factor, I think the decline in US stocks is pretty much 100% responsible for the fall in Tokyo today," said Soichiro Monki, at Daiwa SB Investment



Source: BKP

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