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Markets

Asian shares slide following Wall Street tech sell-off

Japan, Hong Kong and South Korea bench marks weaker on inflation outlook

The Nikkei stock index is seen on an electric board outside a brokerage in a business district in Tokyo. (Photo by Kai Fujii)

TOKYO -- Equity benchmarks across Asia fell sharply on Tuesday, as fears of higher inflation prompted investors to dump risk assets, especially highflying tech stocks.

Japan's blue-chip Nikkei Stock Average index was one of the worst performers, closing down over 900 points, or 3%, while the broader Topix index also slid 2%. The Nikkei index recorded the biggest percentage drop in over two months.

Shares in SoftBank Group fell 6.5% while Panasonic was down nearly 6%. Semiconductor-related companies also bore the brunt with Advantest, Tokyo Electron, and Renesas Electronics all trading lower.

Over 90% of the 225 shares comprising the Nikkei Stock Average fell.

Japan's Mothers index, which includes many startups, weakened over 3%. Companies with high price-to-earnings ratios, like online flea market app Mercari and cloud funding service Makuake, were down.

Tokyo's stock market tumble followed a tech sell-off on Wall Street.

Tech shares led U.S. stocks lower on Monday with the Nasdaq Composite dropping 2.6% as funds flowed out of growth stocks, with investors bracing for higher inflation after the yield on 10-year Treasury bonds edged higher.

Rising inflation threatens the long-term revenue outlook of tech stocks, which underpins their valuation.

Record high prices for commodities, including iron ore and copper, have also triggered anxiety over inflation, leading the rest of Asian markets to also fall.

The run-up in commodity prices has stoked fears of the U.S. Federal Reserve tightening its monetary policy much sooner than expected.

Reports of China bidding up bulk commodities have "led to ever-higher inflation expectations, and despite a fall in real Treasury yields, talk of inflation is deafening," said Chris Weston, head of research at Pepperstone Research in Melbourne.

Data on Tuesday showed China's factory gate prices rose in April at the fastest rate in three and a half years. The U.S. consumer price inflation report due on Wednesday is also expected to show a strong gain in April.

An inflation indicator -- the five-year break-even rate on U.S. Treasury Inflation-Protected Securities, or TIPS -- reached its highest level in a decade.

Hong Kong's Hang Seng Index closed 2.03% lower, its sharpest fall since March 24. Tencent Holdings declined 1.8% and Alibaba Group Holding fell 3.5%. HSBC slipped 1.6%.

Shares in food delivery giant Meituan closed 5.3% lower to HK$249, the lowest level since October. Its chairman Wang Xing had last week posted an ancient poem on a social media that investors interpreted as criticizing Chinese President Xi Jinping. The post was later removed.

However the China CSI 300 Index, which tracks the biggest shares traded in Shanghai and Shenzhen, rose 0.6%.

Data also showed that China's annual population growth slowed during the decade through 2020 to 0.53% from 0.57% in the previous decade, according to the results of a once-a-decade census published Tuesday.

South Korea's Kospi Index fell 1.23% with Samsung Electronics down 2.4% and semiconductor maker SK Hynix slumping 5.38%.

Taiwan's TAIEX fell 3.8% with chipmaker TSMC sliding 3.06%.

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