Kospi drops 7.5% after US inflation data

South Korea's Kospi fell 7.5 percent and Japan's Nikkei 225 dropped 4.8 percent in Thursday trade as Asian technology shares sold off after US inflation data increased expectations that the Federal Reserve could raise interest rates again.

The Kospi was at 5,556.08 around 0230 GMT. SK hynix fell more than 10 percent and Samsung lost more than 9 percent. In Tokyo, Kioxia fell more than 10 percent, Advantest dropped 12 percent and SoftBank lost 9.5 percent. The Nikkei was at 64,489.06.

The sell-off followed losses on Wall Street after the US consumer price index reached 3.7 percent in September, up from 3.4 percent in August and the highest level in five months. Gasoline prices rose 9.1 percent in September and accounted for more than half of the monthly CPI rise.

CME Group's FedWatch tool showed a 37.1 percent chance of a 25-basis-point Fed increase at the October 28 decision, up from about 22 percent before the inflation data. The Fed raised rates in September.

Neil Wilson at Saxo Markets said the CPI report was a “headache” for the Fed because some board members had indicated they wanted to pause. Chris Weston at Pepperstone said evidence of US inflation risk reinforced the higher-for-longer rates narrative and put pressure on risk assets and interest-rate-sensitive equities.

Other Asian markets were also lower. Hong Kong lost 1.0 percent, Shanghai fell 1.5 percent, and Taipei lost almost 3 percent as TSMC gave up around 2 percent. Singapore, Wellington, Manila and Jakarta were also in negative territory.

US 10-year Treasury yields touched new 24-year highs before easing. The dollar gave back most gains linked to higher-rate bets, while the yen was supported by comments from Japan's finance minister warning that Tokyo was ready to step in with support.