On Wednesday, most stocks suffered more selling while oil held losses on growing fears that Federal Reserve tightening will cause the US economy to go into a recession.
The heads of Wall Street's leading banks warned of tough times ahead in 2023, a day deep in the red for New York's three main indexes after the heads of Wall Street's leading banks warned of tough times ahead in 2023.
JPMorgan Chase chief Jamie Dimon predicted a mild to hard recession and Goldman Sachs' David Solomon said jobs and pay would be hit, while Morgan Stanley and Bank of America were uneasy about the outlook.
The comments added to the downbeat mood that had run through trading floors at the beginning of the week after forecast-beating reports on jobs and the giant US services sector fanned fears that the Fed will have to push interest rates higher than hoped.
After a weaker than expected inflation reading for October, markets had been rising and the almost year-long tightening campaign was finally affecting prices.
As the US services industry is where sticky inflation hangs out, any hopes that the Fed will turn more dovish in the months ahead have been put off, said Stephen Innes, SPI Asset Management's Stephen Innes.
He stated that the latest readings suggest that rates will go above five percent before the Fed stops hiking, while several observers have suggested that they won't be reduced until 2024.
Hong Kong, Tokyo, Shanghai, Sydney, Seoul, Singapore, Mumbai, Bangkok, Manila and Jakarta all dropped. London opened slightly higher, Paris was flat and Frankfurt fell.
She said we haven't seen the bottom on equity prices. While this phase of equity market volatility is likely to end in the next few months, earnings have not yet adapted to a recessionary environment. The sombre outlook overshadowed China's move to wind back some of its harsh COVID 19 rules that traders hope will kickstart the world's number two economy, which has been battered this year by months of lock-downs and other containment measures.
A nationwide loosening of restrictions, including a reduction in mandatory PCR tests and allowing some positive cases to be quarantined at home, was announced by officials on Wednesday.
But while the country edges back to normality, Zhiwei Zhang, of Pinpoint Asset Management, warned that it would take time.
Mobility has not recovered much on the national level as a result of the zero-COVID policy, he said. I expect that exports will be weak in the next few months as China goes through a bumpy reopening process.
China will have to rely more on domestic demand because of the weakening of global demand in the year 2023. The recent rally that was fuelled by the reopening may have gone too far and traders are now taking a step back as they contemplate a likely spike in infections in the country, according to other observers.
Oil prices remained stuck at lows not seen for around a year as demand expectations fell.
Brent fell below US$80 for the first time since January, while WTI was at its lowest since December, having fallen from the 14 year highs of around US $140 touched in March after Russia invaded Ukraine. Both contracts were only slightly higher in Asian trade.
OANDA's Edward Moya said that the crude demand outlook is getting crushed as we're in a slowdown across all major economies.
Supplies seem plentiful over the near term, and that has everyone hesitant to take a look at one of the easiest trades of the year.