Most Asian markets track Wall St losses

HONG KONG, China—Asian markets fell Friday on lingering recession worries as data indicated the US economy was slowing down, while Federal Reserve officials pressed their case for further rate hikes to battle stubborn inflation.

The losses tracked a selloff on Wall Street, where tech firms took a hit from bets on further monetary tightening and carmakers tumbled due to concerns about a possible price war.

Investors were also spooked by earnings reports from US regional banks that pointed to a weakening profit outlook following sector turmoil last month that saw three lenders collapse.

Figures showing recurring unemployment benefit claims hitting their highest level since November 2021, combined with an increase in new applications for jobless insurance, pointed to a softening labour market.

That came with news that the closely watched Philadelphia Fed Manufacturing Index fell more than expected and stood in contrast to a surprise surge in the New York Empire Fed Survey on Monday.

The readings indicated the world’s top economy was beginning to feel the weight of a year-long rate hike campaign by the Fed.

But while that suggests inflation could come down, there is a worry that a recession is coming.

“The trend higher in jobless claims clearly shows a slowing in the labour market and plays to views of a US recession in 2023,” said National Australian Bank’s Tapas Strickland.

And Edward Moya at OANDA said jobless claims “will soon see new cycle highs as corporate America has steadily announced more layoffs”.

But he added that “the lag in when the layoffs will happen will keep wage pressures strong throughout the next few months”.

All three main indexes on Wall Street ended in the red, and Asia followed.

Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Mumbai, Bangkok and Taipei all fell.

London rose even as data showed UK retail sales fell much more than expected last month.

Paris also edged up as figures pointed to a surge in eurozone economic growth, though Frankfurt dipped.

Bets on further Fed tightening also led the dollar higher against its major peers.

While traders are keeping close tabs on the release of corporate earnings, their attention is turning to next month’s Fed rate decision.