Hong Kong
CNN Business
 — 

Markets in Asia Pacific fell on Wednesday, following a major drop in US markets as investors reacted to American inflation going higher than expected.

Stocks across the region were down as of early afternoon local time on Wednesday, with Japan’s benchmark Nikkei

(N225) and South Korea’s Kospi

(KOSPI) indices each shedding 2.3% and 1.6%, respectively.

Chinese markets declined, too, with the benchmark Shanghai Composite (SHCOMP) Index down 1%. Hong Kong’s Hang Seng Index

(HSI) fell 2.6%.

Australia’s S&P/ASX 200 fell sharply, by 2.4%.

US futures pointed up slightly overnight on Wednesday, with Dow futures and Nasdaq futures each tracking 0.1% higher. S&P 500 futures were down 0.1%.

“Equity futures suggest that the rout stops here,” Robert Carnell, regional head of Asia-Pacific research at ING, wrote in a report Wednesday. “I’m not sure I would put a big bet on that outcome.”

Just hours earlier, on Tuesday, US stocks had tanked in their worst day since June 11, 2020, after August inflation data for the country ticked upward, surprising investors.

The US Consumer Price Index, which covers key goods and services, rose 0.1% from July, versus economists’ projections of a 0.1% drop.

The Dow

(INDU) was down 3.9%. The S&P 500

(INX) fell 4.3%, while the Nasdaq Composite

(COMP) plunged 5.2%.

Investors are worried that hotter-than-expected inflation will prompt the US Federal Reserve to raise interest rates more aggressively, which could inflict serious damage to the country’s economy in the process.

The lackluster US inflation data caught global “markets completely off guard” as well, Carnell wrote in his note to clients Wednesday, noting that US core inflation — which strips out the more volatile categories like food and gas — had reached 6.3% in August.

The month-on-month gain of 0.6% was double what economists had expected.

Consumers in the world’s largest economy have been struggling to adjust to rising prices, with cutbacks made on virtually everything from food to school supplies.

— Nicole Goodkind, Alicia Wallace and Laura He contributed to this report.