Asian shares plunge on inflation prospects

Asian share markets traded weakly as they followed Wall Street’s overnight decline on Friday. The subdued performance was owed mainly to a strong U.S. rebound, with investors’ sentiment heavily dampened by the prospect of higher inflation and the Federal Reserve’s taper talks.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.3%, while Japan’s benchmark index Nikkei performed 0.8% lower during its early Asian trade. Chinese blue chips, on the other hand, recorded a 0.1% drop.

Wall Street’s major indexes all fell, with the Nasdaq tallying a 1% slide to stand as the biggest decliner. The S&P 500 and the Dow Jones Industrial Average plunged 0.4% and 0.1% respectively.

The Federal Reserve remained firm about the transitory nature of inflation, hinting that it would keep its accommodative policy rates for some time. However, the central bank has been eager to talk about rolling the country’s stimulus back, forcing investors to parse inflation figures as this would also indicate the Fed’s next stance.