Stocks across Asian markets fell after the US inflation data for March came higher than expected, translating into worries that the Fed may keep interest rates higher for longer.

The US Consumer Price Index for All Urban Consumers rose 0.4% month-on-month in March. It climbed 3.5% over the last 12 months. 

Hong Kong’s Hang Seng slumped over 1%, South Korean benchmark indices Kospi and Kosdaq fell about 0.5% each while China’s CSI 300 index slipped 0.56%. Japan’s Nikkei 225 lost 0.69%. The Australian S&P/ASX 200 slipped 0.72%. Bucking the trend, the Asia Dow inched up 0.26% at 3,358.34. 

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Also, the 10-year US treasury yield shot up by over 10 basis points to be at 4.5% after the CPI beat the analysts’ expectations. Further, the Dow Jones Industrial Average fell more than 420 points to settle at 38,461.51. 

This fall in markets globally can hinder the market rally in India. “We assess that the market is marginally overvalued, as India’s valuations have contracted YTD from a one-year forward P/E of 23x to 20x. The timing and extent of future interest rate cuts will play a pivotal role in shaping stock momentum for the remainder of the year. It is imperative to closely monitor potential delays in rate cuts and any deceleration in earnings growth. Earnings growth in India is showing signs of contraction, with EPS growth expected to moderate to 5-10% in Q4 compared to the robust 25% experienced between April and December 2023,” Vinod Nair, Head of Research at Geojit Financial Services.