Asian stocks joined a global sell-off Thursday on fresh worries the Federal Reserve will hike interest rates again, while China's economic woes continued to shred traders' nerves.
While minutes from the US central bank's July meeting showed two decision-makers were against lifting borrowing costs, they also revealed that "most participants" saw a significant risk that price increases would persist and could require further monetary tightening.
The remarks dealt a blow to investors who had hoped rates were now at their peak following a string of data indicating inflation was falling and the jobs market softening.
And there also remains debate inside the Fed about the next move, with officials giving sharply differing views, though the bank has said it will make decisions based on incoming data.
Futures traders assign a probability of close to 90 percent that the Fed will stand pat at its September meeting, according to data from CME Group, though there is a growing belief more hikes are down the line.
All three main indexes on Wall Street sank, with tech firms -- which are susceptible to higher rates -- acting as a major drag, while 10-year Treasury yields hit their highest level since 2008 at the height of the global financial crisis.
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"The Fed has no choice but to keep it up until they are convinced that inflationary expectations are quashed," said Steve Sosnick of Interactive Brokers.
"Doing otherwise risks some of the embers reigniting. Even though two governors favoured keeping rates steady in July, it is important to keep in mind that a pause is not a pivot."
The dour mood in New York and Europe filtered through to Asia, where all major markets were deep in the red.
And bets on further hikes pushed the dollar higher against its peers, including an eight-month high versus the yen, raising the prospect of Japanese authorities intervening to support their currency.
The selling was intensified by worries about China as authorities struggle to revive a stuttering post-Covid recovery.
Fresh figures Wednesday pointed to a second month of falling new home prices, underscoring deep problems in the property sector that observers fear could spill over into the domestic and global economy.
That came a day after news that growth in retail sales and industrial production had slowed.
Leaders this week pledged to boost consumption at home and boost the private sector, though there were no details. Similarly, promises of help for the property sector and other key areas of the economy have not been followed up with anything concrete.
"Investors looking for more aggressive support from policy makers amid soft activity have been disappointed as the recent incremental measures haven't been sufficient to restore confidence," said Taylor Nugent, at National Australia Bank.
US officials have also raised concerns about a possible spillover of China's troubles, with Deputy Treasury Secretary Wally Adeyemo saying they were proving to be "a headwind -- not just to the US economy, but to the global economy".
That came after Treasury Secretary Janet Yellen on Monday said Beijing's issues were a "risk factor" for the United States.
Key figures around 0230 GMT
Tokyo - Nikkei 225: DOWN 0.9 percent at 31,478.90 (break)
Hong Kong - Hang Seng Index: DOWN 1.3 percent at 18,086.56 (break)
Shanghai - Composite: DOWN 0.4 percent at 3,138.44
Euro/dollar: DOWN at $1.0870 from $1.0880 on Wednesday
Pound/dollar: DOWN at $1.2721 from $1.2725
Euro/pound: DOWN at 85.43 pence from 85.48 pence
Dollar/yen: UP at 146.38 from 146.33 yen
West Texas Intermediate: UP 0.1 percent at $79.43 per barrel
Brent North Sea crude: UP 0.1 percent at $83.55 per barrel
New York - Dow: DOWN 0.5 percent at 34,765.74 (close)
London - FTSE 100: DOWN 0.4 percent at 7,356.88 (close)