Asian markets slip on Fed rate-hike fears, weaker China manufacturing data

BEIJING — Asian stocks followed Wall Street lower Thursday after strong US jobs data fueled expectations of further interest rate hikes and Chinese manufacturing activity weakened.

The Nikkei 225 NIK,
-0.40%
in Tokyo shed 0.4% and the Hang Seng HSI,
-0.39%
in Hong Kong slipped 0.5%. The Shanghai Composite Index SHCOMP,
-1.18%
fell 1.2% after a monthly index of manufacturing activity showed contracted again in August.

The Kospi 180721,
+0.36%
in South Korea rose 0.4% while Sydney’s S&P/ASX 200 XJO,
-0.15%
what little changed. Benchmarks in New Zealand NZ50GR,
+0.19%
and Taiwan Y9999,
+0.63%
advanced while Singapore STI,
-0.49%
and Indonesia JAKIDX,
-0.76%
declined.

US government data Tuesday that showed there were two jobs for every unemployed person in July appeared to support arguments the economy can tolerate more rate hikes to tame inflation that is running at multi-decade highs. Some investors had hoped the Federal Reserve would back off due to indications economic activity is cooling.

The jobs data “supported the argument for the Fed to stick to an aggressive stance,” said Edward Moya of Oanda in a report.

Investors worry rate hikes by the Fed and other central banks in Europe and Asia to extinguish an inflation surge might derail global economic growth.

Chair Jerome Powell indicated Friday the Fed will stick to its strategy of rate hikes. The Fed has raised rates four times this year. Two of those were by 0.75 percentage points, three times the usual margin.

Traders appear to expect a 0.75 percentage-point hike in September, a half-point in November and 0.25 points in December, according to Moya.

“If the labor market doesn’t break and the consumer remains resilient, Wall Street might start pricing in rate hikes for February and March,” Moya wrote.

On Wall Street, the benchmark S&P 500 index SPX,
-1.10%
fell 1.1% to 3,986.16. That brought its decline over the past five days to 5.5%.

The Dow Jones Industrial Average DJIA,
-0.96%
dropped 1% to 31,790.87. The Nasdaq composite COMP,
-1.12%
lost 1.1% to 11,883.14.

The US government reported there were 11.2 million open jobs on the last day of July. That was up from 11 million in June, and June’s figure was also revised higher.

In energy markets, benchmark US crude CLV22,
+0.91%
gained 89 cents to $92.53 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $5.37 to $91.64 on Tuesday. Brent Crude BRNV22,
+0.70%,
used to price international trading, rose 93 cents to $98.77 per barrel in London.

The dollar USDJPY,
-0.19%
edged down to 138.58 yen from Tuesday’s 138.67 yen.

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