Asia stock markets continued their retreat on Thursday with nervous investors waiting on the latest US inflation figures amid wider fears of a global recession.
Bourses across the region followed Wall Street lower and crude oil stayed weak as hawkish Federal Reserve rhetoric and uncertainty about the Bank of England’s next move spread an air of gloom across trading floors.
Japanese stocks dropped as cautious traders braced themselves for more bad news on US inflation, and the likely consequence of more central bank tightening.
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Japan’s Nikkei share average started the session higher, but shed early gains to trade down 0.60%, or 159.41 points to end at 26,237.42. The broader Topix index fell 0.77 percent, or 14.39 points, to 1,854.61.
Toshiba Corp was the most notable mover, jumping as much as 9.41% on a report that a consortium led by Japan Industrial Partners is looking to buy the conglomerate for 2.8 trillion yen ($19.07 billion).
Toshiba shares were up 7.38%, marking Thursday’s biggest impact in the Topix index.
The immediate focus for investors now, though, is US consumer price data due later in the global day.
Federal Reserve Governor Michelle Bowman struck a hawkish stance in a speech on Wednesday, saying that if high inflation does not start to wane she will continue to support aggressive rate hikes.
Last month, CPI data showed that US inflation accelerated more than was broadly expected, sending Wall Street to its biggest daily loss in more than two years with the Nikkei tumbling in turn.
MSCI’s broadest index of Asia-Pacific shares lost 0.57%, languishing close to Wednesday’s two-and-a-half-year low.
China Sticking With Covid Policy
China stocks didn’t move much while Hong Kong shares extended their losses, as traders held back ahead of China’s 20th Communist Party congress.
And for third consecutive day, the People’s Daily, the official newspaper of the Communist Party, stressed China will continue with its current tough Covid-19 policies.
“Investors are losing hopes on any near-term Covid policy easing or meaningful stimulus on the economy. On the other hand, Asian countries continue to see capital outflows as US inflation pressure is still high,” said Steven Leung, executive director at UOB Kay Hian.
The Shanghai Composite Index dipped 0.30%, or 9.15 points, to 3,016.36, while the Shenzhen Composite Index on China’s second exchange gained 0.25%, or 4.74 points, to 1,934.28.
In Hong Kong, large tech companies dragged the market lower, with the Hang Seng index down 1.87%, or 311.92 points, to 16,389.11. Meituan dropped 2.2%, while JD.com tumbled 3.2%.
Elsewhere across the region, South Korea’s Kospi slid 1.15% while Mumbai’s signature Nifty 50 index fell 0.40%, or 69.10 points, at 17,054.50.
US Dollar Remains Close to Highs
Globally, the dollar held its ground against major peers and bond yields edged higher as traders waited for the latest US consumer price data.
“I’m more concerned than I’ve been for some time,” said Tom Nash, a fixed income portfolio manager at UBS Asset Management in Sydney. “The risk of an over-tightening episode and some mishap in financial markets is higher than I can remember.”
Markets are laying 90% odds for another 75 basis-point US rate hike in November, versus 10% probability of a half-point bump. The dollar index, which gauges the greenback against six major rivals, stuck near the middle of its range this week, trading little changed at 113.27.
The US currency remained close to a fresh 24-year high to the yen from overnight at 146.98, last changing hands at 146.81.
Benchmark 10-year gilt yields had swung from a fresh 14-year peak at 4.632% to close at 4.429% on Wednesday, little changed from the previous session.
The Bank of England insisted that its emergency bond market support will expire on Friday as originally announced, countering media reports of continued aid if necessary.
Meanwhile, crude oil markets remained weak following a 2% slide on Wednesday amid worries over demand.
Key figures
Tokyo – Nikkei 225 < DOWN 0.60% at 26,237.42 (close)
Hong Kong – Hang Seng Index < DOWN 1.87% at 16,389.11 (close)
Shanghai – Composite < DOWN 0.30% at 3,016.36 (close)
London – FTSE 100 < DOWN 0.27% at 6,807.93 (0935 BST)
New York – Dow < DOWN 0.10% at 29,210.85 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
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