Global shares trade mostly lower after the year's biggest Wall St retreat

Global shares were mostly lower Thursday as investors grew cautious after Wall Street's biggest pullback of the year.

France's CAC 40 lost 0.4 per cent in early trading to 7,052.61, while Germany's DAX edged down 0.5 per cent to 15,106.21. Britain's FTSE 100 fell nearly 0.6 per cent to 7,787.49. The future for the Dow Jones Industrial Average was 0.4 per cent lower while that for the S&P 500 declined 0.3 per cent.

Japan reported its trade deficit more than doubled in December from a year earlier, to 1.4 trillion yen (USD 11.3 billion), while the total deficit for all of 2022 ballooned to nearly 20 trillion yen (USD 156 billion) as the yen weakened and soaring costs for oil and other imports far outpaced an 18 per cent increase in exports.

Japan's benchmark Nikkei 225 slipped 1.4 per cent to 26,405.23. Australia's S&P/ASX 200 gained 0.6 per cent to 7,435.30. South Korea's Kospi added 0.5 per cent to 2,380.34. Hong Kong's Hang Seng shed 0.1 per cent to 21,650.98, while the Shanghai Composite rose 0.5 per cent to 3,240.28.

In a bit of positive news, data from the Japan National Tourism Organisation showed that tourism and other kinds of travel to Japan from Asia outside China had recovered last month.

New data are showing that as inflation cools, the US economy is slowing, adding to worries about the possibility of a recession. A key Federal Reserve policymaker said interest rates need to go higher than the central bank signalled earlier.

"On the macro front, there remains lingering uncertainties about the outlook for the global economy. A slew of disappointing US data releases and hawkish Fed rhetoric are also adding to the risk-off mood across markets," said Anderson Alves, trader at ActivTrades.

The S&P 500 fell 1.6 per cent on Wednesday, while the Dow industrials lost 1.8 per cent. The Nasdaq composite slid 1.2 per cent, ending a seven-day winning streak. The losses are a reversal for the market, which kicked off the year with a two-week rally.

The Russell 2000 index fell 1.6 per cent.

The government reported Americans cut back on their spending at retailers more than anticipated last month, the second straight decline. Separately, the Federal Reserve said US industrial production, which covers manufacturing, mining and utilities, fell in December much more than economists had expected.

The US government also reported more encouraging inflation data. Wholesale prices rose 6.2 per cent in December from a year earlier, a sixth straight slowdown for the measure of prices before they are passed along to consumers.

Investors have been hoping that easing inflation and a slowdown in economic growth might influence the Federal Reserve's position on interest rates. The central bank aggressively raised rates throughout 2022 in an effort to cool hot inflation.

The broader economic picture is still not clear enough to see whether the Fed's fight against inflation is working well enough to avoid a recession. Several major banks have forecast at least a mild recession at some point in 2023.

In energy trading Thursday, US benchmark crude fell 97 cents to USD 78.51 a barrel. It fell 70 cents to USD 79.48 per barrel on Wednesday. Brent crude, the international pricing standard, lost 93 cents to USD 84.05 a barrel.

In currency trading, the US dollar declined to 128.12 Japanese yen from 128.87 yen. The euro cost USD 1.0804, up from USD 1.0796.