Most stocks fell on Tuesday after a Wall Street sell-off fueled by renewed recession fears after Apple planned to cut spending amid uncertainty about the economic outlook.
The decline in most markets in Asia also came as oil rallied Monday, prompted by fading expectations that Joe Biden had persuaded Saudi Arabia to pump more to ease a supply crisis and pushed prices higher mitigate.
Losses in shares pared Monday’s gains after a better-than-expected US retail sales report suggested consumers – the main driver of growth – have remained resilient despite decades of high inflation and rising interest rates.
And analysts warned that with the earnings season just beginning, investors could be in for more pain as companies report falling earnings or warn about the outlook.
In a sign of concern among big-cap companies about an economic slowdown or recession, Bloomberg News said the tech titan Apple was pulling back hiring and some investments.
The news follows similar belt-tightening measures by other Silicon Valley giants, including Alphabet, Amazon and Facebook parent Meta.
“For Apple to raise its hand and admit that it has too many employees is a clear sign of the caution of the heavyweight mega-cap giants at an uncertain time,” said Stephen Innes of SPI Asset Management.
“Investors are hoping for a ‘kitchen sink’ quarter, where companies wash out all the bad news at once — but I’m not sure that’s going to happen, and I think that makes it difficult to hit an all-time bottom in stock selling give. “
The report prompted a reversal on Wall Street, with all three major indices ending in negative territory after rising well for most of the day.
And Asia struggled on Tuesday.
Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Wellington and Manila all fell, although Tokyo rose as investors there returned from a long weekend to catch up with Monday’s regional rally.
Innes added that markets are likely to remain under pressure for some time as central banks continue to raise borrowing costs to fight inflation and risk an economic downturn.
“The likelihood of a recession is dominating US discussions as inflation may have peaked in June while the Fed still has some massive rate hikes ahead of it before potentially pausing,” he said.
“We always hear rate hikes come in price, but they always come as a shock when the market updates reality, especially when they’re of the jumbo variety.”
While some believe inflation may have peaked, oil prices – the main driver of rising prices – remain strong despite recent losses.
Both main contracts rose more than five percent on Monday amid expectations that Riyadh would not open faucets any further, with Biden’s plea appearing to have fallen on deaf ears.
Traders are also nervously eyeing Europe, where a 10-day maintenance shutdown on the Nord Stream 1 pipeline from Russia is set to end.
Many fear Vladimir Putin will keep it closed in retaliation for sanctions against Moscow over its invasion of Ukraine. That would deal another blow to the already struggling eurozone economy and could send crude oil prices higher.
Supply fears trump worries about a slump in demand in China from another potential lockdown in Shanghai as officials scramble to contain another Covid-19 outbreak.
– Key figures at 0230 GMT –
Tokyo – Nikkei 225: up 0.7 percent at 26,977.37 (breakthrough)
Hong Kong – Hang Seng Index: down 0.7 percent at 20,701.98
Shanghai – Composite: down 0.2 percent at 3,270.56
Euro/Dollar: DOWN at $1.0140 from $1.0146 on Monday
Pound/dollar: DOWN at $1.1940 from $1.1950
Euro/Pound: DOWN at 84.84p from 84.88p
Dollar/yen: up at 138.24 yen from 138.13 yen
West Texas Intermediate: FALSE, up 0.2 percent at $102.45 a barrel
North Sea Brent Crude: FALSE, up 0.2 percent at $106.02 a barrel
New York – Dow: down 0.7 percent at 31,072.61 (close)
London – FTSE 100: up 0.9 percent at 7,223.24 (close)
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