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Shares retreated in Asia on Friday after a mixed day on Wall Street as optimism over signs the Federal Reserve may temper its aggressive interest rate hikes was replaced by worries the economy might be headed for a recession.
A US measure of inflation that's closely watched by the Federal Reserve eased in October, raising questions over the central bank's determination to keep raising interest rates to tame price increases.
And activity in American manufacturing contracted in November for the first time since May 2020, according to the Institute for Supply Management. The report also showed that prices are falling.
Slower growth due to tighter monetary policies has slowed new orders and order backlogs, which saw manufacturing conditions contracting for the first time since June 2020," Jun Rong Yeap of IG said in a report.
That may suggest that with inflation risks behind us now, bad news' in economic data may not be good news' for markets as recession fears could be brewing," he said.
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Signs of weakening trade, especially for export dependent economies in Asia, have deepened worries over slowing growth in China and its implications for the global economy.
Tokyo's Nikkei 225 index lost 1.7 per cent to 27,750.22 and the Hang Seng in Hong Kong declined 0.7 per cent to 18,612.49. The Kospi in Seoul shed 1.4 per cent to 2,445.86.
The Shanghai Composite index gave up 0.3 per cent to 3,154.74 and Australia's S and P/ASX 200 slipped 0.7 per cent to 7,305.70.
Bangkok's SET index lost 0.4 per cent and the Sensex in Mumbai was down 0.6 per cent.
That followed a 0.1 per cent decline in the benchmark S and P 500, which closed at 4,076.57 on Thursday.
The Dow Jones Industrial Average fell 0.6 per cent to 34,395.01, while the Nasdaq edged 0.1 per cent higher to 11,482.45.
The Russell 2000 index of small companies also took a step back, falling 0.3 per cent to close at 1,881.68.
Action was muted as traders awaited a closely watched monthly report on jobs due out on Friday that will show how the labour market is holding up, which may influence what the Fed does next in its bid to cool inflation.
Banks and household goods providers were among the biggest drags on the benchmark S and P 500. Bank of America fell 2.9 per cent and Costco slid 6.6 per cent.
Gains in health care companies, communications services stocks and elsewhere in the market helped keep the losses in check. Drugmaker Pfizer rose 1.9 per cent and Netflix climbed 3.7 per cent.
Salesforce slumped 8.3 per cent for the biggest drop in the S and P 500 after Bret Taylor said he would resign as co-CEO of the customer-management software developer.
Markets rallied Wednesday after Fed Chair Jerome Powell the central bank could begin moderating its pace of rate hikes at its next meeting in mid-December.
The Fed, though, has been very clear about its intent to continue raising interest rates until it is sure that inflation is cooling.
The Fed has raised its benchmark rate six times since March, driving it to a range of 3.75 per cent to 4 per cent, the highest in 15 years.
Wall Street expects the benchmark rate to reach a peak range of 5 per cent to 5.25 per cent by the middle of 2023.
A big concern for Wall Street has been whether the Fed can tame rates without sending the economy into a recession as it hits the brakes on growth.
Businesses are seeing demand fall for a wide range of goods as inflation squeezes wallets. Analysts generally expect the US to dip into a recession, even if it is mild and short, at some point in 2023.
In other trading Friday, US benchmark crude oil lost 6 cents to USD 81.16 per barrel in electronic trading on the New York Mercantile Exchange. It gained 67 cents to USD 81.22 per barrel on Thursday.
Brent crude oil, the standard for pricing oil for international trading, added 12 cents to USD 87.00 a barrel.
The US dollar slipped to 135.10 Japanese yen from 135.31 yen late on Thursday. The euro was unchanged at USD1.0522.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
