A weeks-long rally in equities has faded in the last few days on profit-taking and as central bank officials pushed back against bets on an early cut
Markets dropped in Asia on Friday, tracking a sell-off on Wall Street sparked by a series of better-than-expected US data that added to concerns the Fed will hold off on cutting interest rates this year.
A weeks-long rally in equities has faded in the last few days on profit-taking and as central bank officials pushed back against bets on an early cut.
Confidence was dealt a further blow Thursday as a closely watched gauge of the services sector showed services activity increased at its fastest pace in a year, while the factory sector also beat forecasts.
Meanwhile, fewer people than estimated made unemployment claims, indicating the labour market remains tight.
The readings suggested the US economy was still in rude health, quelling the excitement sparked by last week’s news that the CPI slowed in April after three months of topping forecasts.
The data erase some of the cooling signals in recent outcomes and contrast the month-long run of broader US data tending to surprise on the soft side, according to Taylor Nugent of National Australia Bank.
The figures came after minutes from the Federal Reserve’s May policy decision showed decision-makers wanted to keep borrowing costs higher until they are confident prices are under control, while some even said they were willing to hike again.
FHN Financial’s Chris Low noted: The minutes are a reminder that while the Fed does not see another rate hike as likely – and certainly does not see it as a base-case – it will not rule out hikes if inflation does not behave.
Main indexes in the US and Asia closed in the red.
Hong Kong dropped for a fourth consecutive day, having touched a nine-month high earlier in the week, while there were also losses in Tokyo, Shanghai, Seoul, Singapore, Sydney, Wellington, Taipei and Manila.