Asian stock markets pick up where plunging Wall Street left off

Investor sits in front of displays showing stock information at brokerage office in Beijing on October 11, 2018

THOMAS PETER / REUTERS

Last Updated Oct 11, 2018 3:08 AM EDT

SINGAPORE — A stock market rout that started on Wall Street rolled through Asia on Thursday, driving China’s benchmark to a four-year low and sending indexes in Japan, Korea and Australia plunging.

Japan’s benchmark fell by an unusually wide margin of 3.9 percent and China’s main index lost 5.6 percent. Markets across Southeast Asia recorded similar declines.

Investors are wary of possible further U.S. interest rate hikes. That will raise the cost of corporate borrowing and could drag on economic growth.

The U.S. Federal Reserve recently raised short-term interest rates for the third time this year, with one more expected before the year ends. Strong economic data and a positive outlook from Fed officials have led to a sell-off in U.S. Treasury bonds, particularly longer-term ones, sparking concerns about even higher interest rates.

On Wednesday, President Donald Trump said the Fed “is making a mistake” with its campaign of rate increases. “I think the Fed has gone crazy,” he charged.

Stephen Innes of OANDA said that Trump’s comments have unsettled traders and put pressure on the dollar. “Equity markets were pulverized today as investors remain in full out retreat and even the most pessimistic of equity bears are still in shock by the sheer magnitude of the move,” Innes said.

“This meltdown isn’t just a mild case of the sniffles, suggesting the latest sneeze from the U.S. equity market could morph into a global markets pandemic,” he added.

Sentiment also has been dampened by the spreading U.S.-Chinese tariff fight over Beijing’s technology policy. U.S. officials have accused China of meddling in its midterm

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