BEIJING — Asian stocks followed Wall Street lower Thursday after strong U.S. jobs data fueled expectations of further interest rate hikes and Chinese manufacturing activity weakened.
The Nikkei 225 JP:NIK in Tokyo shed 0.4% and the Hang Seng HK:HSI in Hong Kong slipped 0.5%. The Shanghai Composite Index CN:SHCOMP fell 1.2% after a monthly index of manufacturing showed activity contracted again in August.
The Kospi KR:180721 in South Korea rose 0.4% while Sydney’s S&P/ASX 200 AU:XJO was little changed. Benchmarks in New Zealand NZ:NZ50GR and Taiwan TW:Y9999 advanced while Singapore SG:STI and Indonesia ID:JAKIDX declined.
U.S. government data Tuesday that showed there were two jobs for every unemployed person in July appeared to support arguments the economy can tolerate more rate hikes to tame inflation that is running at multi-decade highs. Some investors had hoped the Federal Reserve would back off due to indications economic activity is cooling.
The jobs data “supported the argument for the Fed to stick to an aggressive stance,” said Edward Moya of Oanda in a report.
Investors worry rate hikes by the Fed and other central banks in Europe and Asia to extinguish an inflation surge might derail global economic growth.
Chair Jerome Powell indicated Friday the Fed will stick to its strategy of rate hikes. The Fed has raised rates four times this year. Two of those were by 0.75 percentage points, three times the usual margin.
Traders appear to expect a 0.75 percentage-point hike in September, a half-point in November and 0.25 points in December, according to Moya.
“If the labor market doesn’t break and the consumer remains resilient, Wall Street might start pricing in rate hikes for February and March,” Moya wrote.
On Wall Street, the benchmark S&P 500 index SPX fell 1.1% to 3,986.16. That brought its decline over the past five days to 5.5%.
The U.S. government reported there were were 11.2 million open jobs on the last day of July. That was up from 11 million in June, and June’s figure was also revised higher.
In energy markets, benchmark U.S. crude CLV22 gained 89 cents to $92.53 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $5.37 to $91.64 on Tuesday. Brent crude BRNV22 , used to price international trading, rose 93 cents to $98.77 per barrel in London.
The dollar USDJPY edged down to 138.58 yen from Tuesday’s 138.67 yen.