TOKYO- Asian markets extended the global stocks selloff on Wednesday, as investor worries about aggressive monetary tightening were inflamed further by strong US jobs data.
The overnight JOLTS report on job openings – closely watched by the Federal Reserve – pointed to extremely tight labor conditions, defying the Fed’s tightening efforts so far and bolstering the case to do more.
To discourage speculation about rate reductions next year, New York Fed President John Williams said on Tuesday that the central bank likely needed to get the policy rate above 3.5 percent, and was unlikely to cut rates at all in 2023.
“The strong JOLTS data and Fed rhetoric was the overwhelming narrative,” knocking stocks further and pushing up bond yields, Tapas Strickland, an analyst at National Australia Bank, wrote in a note to clients.
“Financial conditions are a key transmission mechanism for monetary policy, and equities are part of that.”
Japan’s Nikkei sagged 0.6 percent, while Australia’s share benchmark slid 0.4 percent and South Korea’s Kospi lost 0.5 percent.
Chinese blue chips retreated 0.5 percent. Hong Kong’s Hang Seng slumped 1.8 percent, with its tech shares tumbling 2.5 percent.
MSCI’s broadest index of Asia-Pacific stocks declined 0.7 percent. Its world equity index slumped 0.9 percent on Tuesday, for a third straight day of losses.
US equity futures though pointed to some respite, with S&P 500 e-minis EScv1 indicating a 0.3 percent rebound from the index’s 1.1 percent slide on Tuesday.
Investors will now be even more attentive to the monthly US jobs report on Friday.
Earlier on Tuesday, data showed German inflation rose to its highest in almost 50 years in August, strengthening the case for the European Central Bank to also go for a super-sized rate hike next month. — Reuters
