Stock markets resumed their downward trend Wednesday, with traders fearing the Federal Reserve's determination to beat inflation with higher interest rates will tip the world's top economy into recession.
After bouncing from their June lows, global equities are once again taking a hiding from worried investors after Fed chief Jerome Powell warned last week the bank would need to tighten policy much more to succeed in its battle against prices.
Wall Street's three main indexes fell for a third straight day Tuesday to sit at a one-month low, with healthy data on US consumer sentiment and job openings indicating the economy remained resilient despite recent rate hikes and four-decade high inflation.
But analysts said the readings were a case of good news being bad news as they would allow the Fed to stick to its plan of lifting borrowing costs further. Expectations are growing for a third successive three-quarter-point increase next month.
Traders are now awaiting the release of US jobs creation figures on Friday for a better idea about the state of the economy.
But commentators said trying to plot a course through the next few months would be tricky owing to inflation and rate increases as well as other issues such as the Ukraine war, geopolitical tensions and China's Covid-damaged economy.
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"What's clear is that predicting this market is not clean cut," Angeline Newman, of UBS Global Wealth Management, told Bloomberg Television.
"We are living in a world where conflicting economic signals are making the path of monetary policy very difficult to determine."
Hong Kong and Shanghai-led Asian markets opened lower after a report on Chinese factory activity showed another contraction, as the sector was buffeted by lockdowns due to Beijing's zero-Covid strategy and high temperatures that led to energy rationing.
The reading reinforced the view that the world's number two economy continued to struggle.
There were also big losses in Tokyo, Seoul, Singapore, Manila and Jakarta.
Worries about an economic slowdown and the possible hit to demand were also dragging on oil, which was on course for a third monthly drop, with both main contracts tumbling more than five percent Tuesday.
However, while they remain wedged below $100 a barrel, market-watchers pointed out the commodity had plenty of upside potential as investors grapple with a range of supply issues including unrest in Libya and Iraq and expectations that Iran nuclear talks will not end anytime soon.
Adding to the upward pressure was news that Russian energy giant Gazprom intends to shut off gas deliveries for three days from Wednesday via the Nord Stream pipeline through Germany.
Key figures at around 0230 GMT
Tokyo - Nikkei 225: DOWN 0.6 percent at 28,039.91 (break)
Hong Kong - Hang Seng Index: DOWN 1.3 percent at 19,684.90
Shanghai - Composite: DOWN 0.7 percent at 3,203.54
Euro/dollar: DOWN at $1.0021 from $1.0024 on Tuesday
Pound/dollar: UP at $1.1666 from $1.1661
Euro/pound: DOWN at 85.91 pence from 85.95 pence
Dollar/yen: DOWN at 138.54 yen from 138.66 yen
West Texas Intermediate: UP 0.7 percent at $92.26 per barrel
Brent North Sea crude: UP 0.5 percent at $99.85 per barrel
New York - Dow: DOWN 1.0 percent at 31,790.87 (close)
London - FTSE 100: DOWN 0.9 percent at 7,361.63 (close)