The Stock Exchange of Thailand (SET) extended its losses on Wednesday along with other Asian bourses after the US reported sticky inflation, increasing the likelihood the Federal Reserve will keep interest rates elevated.
South Korea's Kospi led losses, falling 1.53% on Wednesday, as Hong Kong's Hang Seng dropped 1.43%.
Japan's Nikkei 225 closed 0.37% lower, while the Shanghai Composite fell 0.39%.
The SET index, following volatile trade in the morning session, closed down 0.32%, continuing from a 0.73% dip on Tuesday after the disappointing fourth-quarter results of Thai listed companies.
Analysts said Asian stock markets dropped after the US reported a January Consumer Price Index (CPI) of 6.4%, compared with 6.45% last month and 7.48% last year, exceeding market expectations.
Core CPI was 5.6% year-on-year and up 0.4% from a month earlier.
KKP Research said key US internal measures including energy and housing prices, which continue to accelerate, have driven inflation.
As a result, the market is concerned inflation might not ease as previously expected, while stoking fears about growing recession risks, said the brokerage.
Krungsri Securities shared the same view, stating the market is concerned the Fed will raise the interest rate by 0.25% at least two more times this year, in March and May, after US inflation was higher than forecast.
According to CME Group's FedWatch Tool, analysts raised their US rate forecast above 5%, possibly as high as 5.25-5.50%.
Fed officials have stated that raising interest rates to control inflation is still a necessity.
In related news, the Securities and Exchange Commission outlined its strategies for 2023-25 under its fourth capital market development plan to support growth opportunities and address challenges facing the Thai bourse.
The plan, which was endorsed by the cabinet on Jan 31, identified five key strategies to drive the growth of the local capital market as a key mechanism to propel the economy.
Under the plan, authorities aim to increase the potential and competitiveness of all sectors of the Thai capital market and economic system, as well as access to the Thai market to allow all sectors to benefit.
Additionally, digitisation would be enhanced to facilitate listing applications and promote sustainability of all sectors in the capital market and the economy in the long run.
The plan also aims for greater investment opportunities with appropriate risk management to enhance the financial well-being of Thais.