Asian markets plunge after Wall St battering

Asian markets plunge after Wall St battering

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HONG KONG: Asian markets fell sharply in early trade on Thursday, after Wall Street suffered one of its worst hits in two years in the previous session.

Dismal earnings reports from retailers on Wednesday fueled concerns about consumer resilience and corporate profitability, sparking a tough day of trading.

Hong Kong was down more than 3 percent on Thursday morning, while Tokyo was down about 2.5 percent.

One of the biggest losers in Hong Kong was Chinese tech giant Tencent, whose shares fell more than 8% on lacklustre first-quarter results.

Elsewhere in the region, Australia posted its lowest unemployment rate in 48 years, which could give Prime Minister Scott Morrison a boost two days before a closely contested federal election.

Unemployment fell to 3.9 percent, the lowest level since 1974, the official statistics agency said.

But shares in Sydney remained down, as did those in Singapore, Shanghai, Seoul and Taipei, although Jakarta shares rose more than 2%.

Stephen Innes of SPI Asset Management called Wednesday’s loss “the biggest one-day drop since June 2020.”

“The weakness came as Target’s quarterly earnings added fuel to the recession risk narrative,” he added.

Target, the North American-focused big-box retailer, plunged around 25 percent after earnings missed expectations despite higher sales.

The company pointed to the hit from higher operating costs in results that echoed those of bigger rival Walmart.

The retailers said profits were under pressure and some consumers were avoiding discretionary purchases as prices for food, gasoline and other household staples rise.

All three major US indices dove, with the Dow sinking more than 1,150 points or 3.6 percent, and the Nasdaq plunging 4.7 percent.

European bourses were also down.

“The big falls in shares of these retails… highlights the damage inflation is inflicting on the sector’s profit margins,” said Fawad Razaqzada at City Index.

“What’s more, consumers are getting squeezed as well and if they now start to cut back on spending then retailers could suffer even further,” he added.

In some of his most hawkish remarks to date, Federal Reserve Chair Jerome Powell said Tuesday that the US central bank would raise interest rates until there is “clear and convincing” evidence that inflation is in retreat.

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