Asian Shares Slip On Fed Worries

Asian stocks fell on Friday, Treasury yields moved up and the dollar index rose as strong U.S. data released overnight fueled worries that the Federal Reserve would stick to its aggressive tightening path for longer to tame inflation.

U.S. weekly jobless claims data pointed to a still tight labor market and third-quarter GDP data was revised higher, renewing hawkish Federal Reserve bets and raising concerns about an economic contraction in 2023.

China’s Shanghai Composite Index slipped 0.3 percent to 3,045.87 as the country battled a wave of Covid infections that has hit the elderly hard. Hong Kong’s Hang Seng Index dropped 0.4 percent to 19,593.06.

New estimates by an analytics company revealed the country may already be recording over a million new Covid infections and at least 5,000 deaths every day.

Japanese shares fell sharply as data showed core consumer inflation in the country hit a fresh 40-year high in November.

Meanwhile, minutes of the Bank of Japan’s October policy meeting showed some policymakers called for the need to continue checking how a future exit from ultra-low interest rates could affect markets and households’ mortgage rates.

The Nikkei 225 Index slumped 1.0 percent to 26,235.25, taking its weekly decline to 4.7 percent. The broader Topix closed 0.5 percent lower at 1,897.94, with chip-related stocks and shippers pacing the declines.

Tokyo Electron gave up 3.7 percent and Advantest plunged 4.5 percent after Micron Technology issued a dismal outlook, announced layoffs and cost-cutting measures.

Utility Kansai Electric Power jumped 5.3 percent after the government announced a new policy to maximize the use of nuclear energy.

Seoul stocks tumbled on expectations of further rate hikes in the United States. The Kospi plunged 1.8 percent to 2,313.69, tracking weakness on Wall Street overnight. Hyundai Motor, Samsung Electronics, SK Hynix and LG Energy Solution dropped 1-3 percent.

Australian markets ended notably lower, dragged down by banks, miners and energy stocks. The benchmark S&P/ASX 200 Index slid 0.6 percent to 7,107.70, while the broader All Ordinaries Index closed 0.7 percent lower at 7,287.80.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 Index ended down 0.3 percent at 11,494.96.

U.S. stocks fell sharply overnight and the dollar rose, as signs of a tight labor market and an upward revision to U.S. third quarter GDP growth heightened expectations of further Fed tightening.

The tech-heavy Nasdaq Composite tumbled 2.2 percent to its lowest closing level in well over a month, while the Dow dropped 1.1 percent and the S&P 500 shed 1.5 percent.

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