Asian shares were in retreat again on Friday as strong consumer data out of the US sparked fears of turbo-charged inflation and more central bank tightening.
In China, its latest Covid woes also weighed as cases continued to soar following Beijing’s rollback of its economically-painful virus curbs.
US weekly jobless claims data pointed to a still tight labour market, while the US economy rebounded faster than previously estimated in the third quarter.
That dragged down Wall Street and fed into Asia’s markets with Japan’s Nikkei share average dropping and heading for its worst week since mid-June, with chip-related stocks leading the day’s decline.
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Shippers and other economically sensitive stocks also languished amid worries about continued Federal Reserve policy tightening that could trigger a recession.
The benchmark Nikkei 225 index dropped 1.03%, or 272.62 points to end at 26,235.25. The broader Topix index fell 0.54%, or 10.23 points, to 1,897.94.
The Nikkei was set to post a weekly drop of 4.78%, which would be its worst performance since the week ended June 17. It has fallen in all but one of the past seven sessions, buffetted both by the Bank of Japan’s surprise hawkish policy tweak on Tuesday and ongoing worries about the US economy.
China stocks ended lower too with investors concerned not just about a hawkish US Federal Reserve but also the country’s worsening Covid problems.
China is expecting a peak in Covid-19 infections within a week, a health official said, with authorities predicting extra strain on the country’s health system even as they downplay the disease’s severity and continue to report no new deaths.
China’s blue-chip CSI 300 Index closed down 0.2%, while the Shanghai Composite Index declined 0.28%, or 8.56 points, to 3,045.87. The Shenzhen Composite Index on China’s second exchange also dropped 0.28%, or 5.56 points, to 1,950.02.
The Hang Seng China Enterprises Index declined 1.1% while the bourse’s main index dropped 0.44%, or 86.16 points, to 19,593.06.
For the week, the CSI 300 Index was down 3.2%, logging the worst weekly performance since November, while the Hang Seng Index edged up 0.7%.
Indian stocks slumped with Mumbai’s signature Nifty 50 index down 1.77%, or 320.55 points, at 17,806.80.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1%, snapping a two-day winning streak.
US Dollar Index Advances
European stock futures indicated that stocks were set to rise, with the Eurostoxx 50 futures climbing 0.44%, German DAX futures advancing 0.48% and FTSE futures up 0.20%.
Market attention will now shift to US personal consumption expenditures (PCE) data due later on Friday that will provide further clues on whether inflation is continuing to moderate.
Economists polled by Reuters expect core PCE price index to rise 0.2% for November, while predicting a 4.7% rise for the 12 months through November.
“Friday could be an important day for markets,” said Tom Lee, head of research at Fundstrat Global Advisors, adding that downside surprises to PCE inflation could result in a less hawkish path forward for the Fed.
The US central bank raised interest rates by 50 basis point this month after four consecutive 75 basis-point hikes this year, but Chair Jerome Powell has said the Fed will deliver more hikes in 2023 even as the economy slips towards a recession.
In the currency market, the Japanese yen weakened 0.26% versus the greenback to 132.70 per dollar. It, however, remains on track for its third largest weekly gain this year of more than 3%, after the central bank stunned markets on Tuesday by tweaking its policy on government bonds.
The dollar index, which measures the greenback against six other currencies, rose 0.01% to 104.39.
Meanwhile, oil prices rose on expectations of lower Russian crude exports from the Baltic region in December.
Key figures
Tokyo – Nikkei 225 < DOWN 1.03% at 26,235.25 (close)
Hong Kong – Hang Seng Index < DOWN 0.44% at 19,593.06 (close)
Shanghai – Composite < DOWN 0.28% at 3,045.87 (close)
London – FTSE 100 > UP 0.11% at 7,477.78 (0945 GMT)
New York – Dow < DOWN 1.05% at 33,027.49 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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