Asian markets slide after a tough day on Wall Street

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In Hong Kong, Hang Seng lost 2.8%, causing losses in the region. The Japanese Nikkei also fell more than 2%. Kospi in Korea fell 1.6%. China’s Shanghai Composite Index fell 1%.

The US stock market rallied steeply on Wednesday as investors increasingly worried about rising inflation and a possible economic recession. The Dow Jones Industrial Average lost 3.6%, its worst trading day since June 2020. The S&P 500 fell 4% and the Nasdaq Composite fell 4.7%.

Futures on Asian stock markets continued their downward trend on Thursday morning. Dow futures fell 0.4%. S&P 500 futures and Nasdaq futures fell 0.5% and 0.8%, respectively.

Dow drops 1,160 points on worst trading day since June 2020

IG Group market strategist Jun Rong Yeap said on Thursday that high inflation readings from the UK and Canada “remind markets globally that tackling inflation will be a challenging process among central banks”.

“The rise in Covid-19 cases in China dampens previous hopes for a rapid relaxation in overall virus restrictions and potentially contributes to market risk aversion,” he said.

The Chinese economy is likely to contract in the second quarter as the Covid lockdowns hurt activity. Consumer spending and factory output fell sharply last month, while unemployment rose to the highest level since the first coronavirus outbreak in early 2020.
Covid hit China's economy harder than expectedCovid hit China's economy harder than expected
A senior official in China on Thursday once again sought to boost the morale of the huge tech industry. But markets were still deeply concerned about the growth prospects of the country’s major internet companies.

These concerns were reinforced by a worse-than-expected result Wednesday, when Tencent reported zero first-quarter revenue growth.

“Despite recent assurances by Chinese authorities, the relief in Chinese technology has so far been short-lived as market participants await more concrete policy follow-up to restore longer-term confidence,” Yeap said.