Asia-Pacific equity markets declined across the board, with South Korea's KOSPI leading losses at -6.10%, as regional bourses tracked Wall Street lower amid tech sector weakness and elevated US inflation.

Regional market performance

The sell-off was broad-based, spanning major Asia-Pacific indices. Japan's Nikkei 225 fell 3.26%, while Australia's ASX 200 posted a comparatively modest decline of 0.75%. The moves followed weakness on Wall Street, driven by tech sector pressure and concerns over elevated US inflation.

The table below summarises the performance across the three key regional indices:

Drivers of the decline

Two factors weighed on sentiment across the region. Tech sector weakness, which pressured Wall Street, transmitted broadly to Asia-Pacific markets given the significant weight of technology stocks in indices such as the Nikkei 225 and KOSPI. Elevated US inflation added to the negative backdrop, reinforcing caution among investors across the region.

South Korea's KOSPI recorded the steepest decline among the three indices, falling 6.10%, reflecting the market's relatively high concentration of technology and semiconductor-linked equities. Japan's Nikkei 225 dropped 3.26%, while Australia's ASX 200, with its heavier weighting toward financials and materials, saw a smaller decline of 0.75%.

Asia-Pacific equities opened firmer as US equity futures recovered overnight, despite a hawkish Federal Open Market Committee outcome that saw the Fed raise rates and project another hike.

Regional market performance

Markets across the Asia-Pacific region posted gains, with investors appearing to look past the Federal Reserve's latest policy tightening. The recovery in US equity futures overnight provided a supportive backdrop for regional indices at the open.

The table below summarises the opening performance across key Asia-Pacific markets:

FOMC outcome and market context

The Federal Open Market Committee raised interest rates and signalled the possibility of an additional hike, marking a hawkish policy stance. Despite this development, US equity futures staged an overnight recovery, which appeared to support sentiment across Asia-Pacific trading sessions. The Nikkei 225 led regional gains at +0.86%, followed by the KOSPI at +0.35% and the ASX 200 at +0.18%.