Asian Shares Retreat On Growth Worries

Asian stocks retreated on Friday and U.S. Treasury yields held overnight declines as U.S. earnings and economic data showed signs of weakness.

A fight over raising the U.S. debt ceiling and increasing Sino-U.S. tensions also weighed on markets, heading into the weekend.

U.S. Treasury Secretary Janet Yellen on Thursday called for better economic ties with China, adding the country will protect its national security interests and push back against Chinese actions to dominate foreign competitors.

Gold fell about 1 percent on dollar strength, while oil extended losses for a third day running and looked set for a hefty weekly loss on fears of a possible recession in 2023 and a slowdown in fuel demand.

U.S. two-year Treasury yields extended Thursday’s drop as investors increasingly priced in a Fed pause this summer.

Chinese and Hong Kong markets led regional losses as investors fretted about China’s uneven economic recovery.

The benchmark Shanghai Composite Index plunged 2.0 percent to 3,301.26, while Hong Kong’s Hang Seng Index ended 1.6 percent lower at 20,075.73.

Japanese shares fell from an eight-month high as investors looked ahead to next week’s Bank of Japan policy meeting for directional cues.

Japan’s inflation rate for March came in line with expectations, adding to pressure on the central bank to eventually tighten policy. However, preliminary data on manufacturing and service sector activity missed estimates in April.

The Nikkei 225 Index settled 0.3 percent lower at 28,564.37 after rising to 28,778.37, its highest level since August 26. The broader Topix closed 0.2 percent lower at 2,035.06.

Heavyweights Fast Retailing and SoftBank Group fell 1.8 percent and 1.9 percent, respectively. Precision machine maker Disco Corp. jumped more than 4 percent after posting a record group annual operating profit. Shares of Rakuten Bank soared around 38 percent in their market debut.

Seoul stocks extended losses for a second consecutive session, reflecting recession worries. The Kospi dropped 0.7 percent to 2,544.40, with Hyundai Motor, LG Energy Solution and Samsung SDI losing 1-2 percent.

LG Chem lost 3.6 percent, while chip giant SK Hynix gained 1.6 percent. Hyundai Engineering & Construction jumped 4.3 percent after reporting better-than-expected first-quarter earnings.

Australian markets fell, dragged down by financials and material stocks. The benchmark S&P/ASX 200 Index slid 0.4 percent to 7,330.40, while the broader All Ordinaries Index ended 0.4 percent lower at 7,523.

Mining giant BHP lost 2.3 percent after cutting its full-year Escondida copper and nickel production expectations. Lynas Rare Earths rallied 4.8 percent after its Malaysian plants posted record output.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index rose 0.4 percent to 11,927.50.

U.S. stocks ended firmly in the red overnight as investors reacted to weak economic data and a mixed bag of earnings from the likes of Tesla, AT&T, American Express and IBM.

Weekly jobless claims rose last week, manufacturing activity in the mid-Atlantic region plunged to its lowest level in 3 years in April and existing home sales fell in March, adding to recession worries.

The Dow slid 0.3 percent, the tech-heavy Nasdaq Composite shed 0.8 percent and the S&P 500 eased 0.6 percent.

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