In Hong Kong: After expectations that the Federal Reserve will raise interest rates well into next year were fueled by forecast-beating US data on Friday, Asian markets fell once more.
A sullen admonition from top chipmaker Micron and stresses over China's flooding Coronavirus cases added to the not exactly Christmassy mind-set on exchanging floors.
This month, investors have experienced a rollercoaster ride as inflation has slowed and monetary policy hikes have eased, but the central bank has also warned that borrowing costs will likely have to rise more than anticipated.
These concerns were exacerbated by the unexpected decision made this week by the Bank of Japan to abandon its ultra-loose monetary policy, which increased bets on an even more restrictive investment climate in 2023.
After revised data revealed that the world's largest economy grew a lot more in July-September than initially thought and that jobless claims rose less than expected last week, Wall Street's three primary indexes ended the day in the red.
The readings suggested that the Fed had a lot more work to do, and that activity remained strong despite nearly a year of rate hikes and rising inflation.
Additionally, it experienced a much larger loss than anticipated and a significant drop in sales.
Edward Moya, an analyst with OANDA, stated, "The Grinch selloff is firmly in place after Micron delivered a gloomy outlook and as better-than-expected US economic data supported the Fed's case for more ongoing rate increases."
Investors ought to be concerned about earnings downgrades and credit risks because "the majority of the economic readings for the major economies have yet to fully impact fully the global coordinated central bank tightening."
New York's losses spread to Asia, where Tokyo lost more than 1%, as did Hong Kong, Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei, Manila, and Jakarta.
Priya Misra of TD Securities stated to Bloomberg Television, "The consumer has a lot more strength than I think what the market was pricing in."
"Consumer spending slows down when the accumulated savings they've had since Covid run out, which we think will happen by the middle of next year."
A rise in cases across the country, which has kept people at home and hampered travel and economic activity, has subverted hopes that China's growth will accelerate as it reverses its zero-Covid strategy.
According to Guan Yi Low of M&G Investments, "The spike in Covid-19 infection rates following the easing of mobility restrictions will still constrain economic activity in the December-January time frame."
However, expectations that crude demand will rise in the new year and a decrease in US stockpiles are providing the commodity with solid support, with both main contracts rising by about 5% this week.
This came as Micron Technology stated that it would struggle to return to profit the following year due to the industry's worst supply glut in more than a decade.