Asian investors took a fright on Thursday at a forecast-busting reading on the US services sector that revived speculation the Federal Reserve could lift interest rates again, compounding a surge in oil prices that has fanned fresh inflation fears.
Wall Street dropped and Treasury yields surged after the release of the Institute of Supply Management data, causing a blow to hopes the U.S. central bank had reached the end of its tightening cycle following a string of positive data.
The reading put further upward pressure on the dollar, with the yen particularly in focus as it sat at its weakest point for 10 months last year when Japanese officials intervened in money markets to prop it up.
The gloom that has characterized markets for much of the summer has returned as traders contemplate the possibility of more tightening and borrowing costs kept elevated for an extended period to tame inflation.
The Fed's decision makers have differed on the best way to go forward, with some calling for more hikes and others suggesting rates are high enough.
Boss Jerome Powell has said that all decisions will be made based on how data stacks up over the next few months.
While the economy and the jobs market have shown continued strong growth, there is a growing worry on trading floors that more than a year of increases-and any more should they come- could tip the United States into recession.
Quincy Krosby, head of LPL Financial's regional operations, said: 'LPL Financial has made significant contributions to the market.
's good news for the economy is bad news for markets,' said SPI's Stephen Innes.
In Hong Kong's troubled property firms such as Evergrande, Sunac and Country Garden extended the week's gains on lingering optimism that Chinese authorities will unveil more measures to support the beleaguered sector.
Crude dipped but held at its November levels on supply worries after Russia and Saudi Arabia extended their production cuts to the end of the year, and some commentators warned they could go back to $100 a barrel.
Investors are keeping watch on Japan following its top currency official, who made a verbal intervention on Wednesday, saying authorities were ready to take action when needed.
The yen has come under more pressure due to the Bank of Japan's refusal to move away from its extremely-loose monetary policy, though JP Morgan Chase's head of markets research for the nation warned the unit could face further weakening.
He was a former trader at the BoJ, according to Bloomberg News.
I'm not sure how we can get out of this situation, I'm just saying.