Shares fell in Asia on Thursday after a decline on Wall Street, where strong economic data revived worries that the Federal Reserve might keep interest rates high for longer than investors had been hoping.
Hong Kong’s Hang Seng, which has bounced this week on news about Chinese policy changes for the property sector, declined on selling of tech shares. It fell 0.8% to 18,313.73.
The Shanghai Composite index lost 0.3% to 3,148.52, while Tokyo’s Nikkei 225 edged 0.1% lower, to 33,200.85.
In Seoul, the Kospi sank 0.7% to 2,544.71. Australia’s S&P/ASX 200 was off 1.1% at 7,176.70.
On Wednesday, the S&P 500 dropped 0.7%, closing at 4,465.48. The Dow Jones Industrial Average shed 0.6% to 34,443.19, and the Nasdaq gave back 1.1% to 13,872.47.
Big technology stocks were among the biggest drags on the market. Apple fell 3.6% and Nvidia dropped 3.1%.
But several companies made big moves after reporting earnings and other updates. AeroVironment jumped 20.7% after the maker of unmanned aircrafts raised its sales forecast for the year. Roku rose 2.9% after giving investors an encouraging financial update and saying it would cut 10% of its staff.
The latest pullback in stocks came as Treasury yields climbed following data showing the U.S. services sector remains strong.
The Institute for Supply Management’s latest survey showed that the sector, which employs most Americans, grew at a faster pace than economists expected in August. The sector is among the biggest pieces of the U.S. economy and it has remained resilient throughout 2023 despite persistent inflation and rising interest rates squeezing consumers.
“”Paradoxically, however, what’s good news for the economy is bad news for markets,” Stephen Innes of SPI Asset Management said in a commentary. “Currently, we are seeing the downside risk associated with positive growth news, especially when paired with investors fretting about the possible persistent inflationary impacts of higher oil prices.”
The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rose to 4.30% from about 4.25% just before the survey’s release.
Wall Street expects the Fed to hold its benchmark interest rate steady at its next meeting later in September. Investors are mostly betting that the central bank will maintain that pause through the rest of the year. Economic updates last week on consumer confidence, jobs and inflation reinforced those hopes.
Inflation has been easing for months under the weight of the Fed’s aggressive rate hikes that started in 2022 and brought its main interest rate to the highest level since 2001. The policy raised concerns that the central bank might be too aggressive and hit the brakes on economic growth with enough force that the economy would be thrown into a recession.
A strong jobs market and consumer spending have propped up the broader economy and staved off a recession, so far. Wall Street will get several more economic updates on inflation and retail sales later in September ahead of the Fed’s next meeting.
Beyond the recent mix of economic reports, rising oil prices and a stronger dollar may also be putting traders in a selling mood.