Asian shares sink on revived worries over recession, China

BANGKOK — Shares retreated in Asia on Friday after a mixed day on Wall Street as optimism over signs the Federal Reserve may temper its aggressive interest rate hikes was replaced by worries the economy might be headed for a recession.

A U.S. measure of inflation that’s closely watched by the Federal Reserve eased in October, raising questions over the central bank’s determination to keep raising interest rates to tame price increases.

And activity in American manufacturing contracted in November for the first time since May 2020, according to the Institute for Supply Management. The report also showed that prices are falling.

Slower growth due to tighter monetary policies has slowed new orders and order backlogs, “which saw manufacturing conditions contracting for the first time since June 2020,” Jun Rong Yeap of IG said in a report. That may suggest that with “inflation risks behind us now, ‘bad news’ in economic data may not be ‘good news’ for markets as recession fears could be brewing,” he said.

Signs of weakening trade, especially for export dependent economies in Asia, have deepened worries over slowing growth in China and its implications for the global economy.

Tokyo’s Nikkei 225 index lost 1.6% to 27,777.90 and the Hang Seng in Hong Kong edged down 0.1% to 18,717.28. The Kospi in Seoul shed 1.8% to 2,434.33.

The Shanghai Composite index gave up 0.3% to 3,156.14 and Australia’s S&P/ASX 200 slipped 0.7% to 7,301.50.

Bangkok’s SET index lost 0.3% and the Sensex in Mumbai was down 0.8%.

The declines followed a 0.1% retreat in the benchmark S&P 500, which closed at 4,076.57 on Thursday. The Dow Jones Industrial Average fell 0.6% to 34,395.01, while the Nasdaq edged 0.1% higher to 11,482.45.

The Russell 2000 index of small companies also took a step back, falling 0.3% to close at 1,881.68.

Action was muted as traders awaited a closely watched monthly report on jobs due out Friday that will show how the labor market is holding up, which may influence what the Fed does next in its bid to cool inflation.

Banks and household goods providers were among the biggest drags on the benchmark S&P 500. Bank of America fell 2.9% and Costco slid 6.6%.

Gains in health care companies, communications services stocks and elsewhere in the market helped keep the losses in check. Drugmaker Pfizer rose 1.9% and Netflix climbed 3.7%.

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