Nasdaq Decline Weighs on Asian Markets as Korea Inflation Hits 2.5-Year High

Asian Markets Slump as Nasdaq Drop Spurs Risk-Off Sentiment

Equity markets across Asia opened sharply lower on Thursday, extending losses from the previous session after the US Nasdaq Composite declined amid mounting macroeconomic concerns. South Korea's Kospi index plunged 6%, while Japan's Nikkei 225 dropped more than 2.5%, reflecting heightened investor anxiety over inflation dynamics and sector-specific risks.

The downturn followed data showing South Korea's inflation rate climbing to a 2.5-year high, reigniting fears of tighter monetary policy. The Bank of Korea faces growing pressure to act as price pressures persist, potentially impacting the South Korean won (KRW) and regional risk appetite.

Goldman Sachs analysts also warned of potential outflows from chip stocks, a key component of the Nasdaq and Asian tech-heavy indices. This adds to concerns over the semiconductor sector's vulnerability amid global economic uncertainty and supply chain disruptions.

Forex Implications and Market Outlook

The risk-off tone has strengthened the US dollar, with the DXY index edging higher as investors seek safe-haven assets. The KRW and JPY may face further downside pressure if risk sentiment deteriorates. Traders will monitor upcoming US inflation data and central bank communications for cues on monetary policy direction.

Technical indicators suggest continued volatility in equity markets, with key support levels under scrutiny. The Nasdaq's decline underscores the fragility of growth-oriented assets in the face of persistent inflation and geopolitical risks.

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