Asian markets posted big early losses on Thursday, after Wall Street suffered one of its worst batterings in two years in the previous session.

Downcast earnings reports from retailers had exacerbated worries about consumer resilience and corporate profitability on Wednesday, sparking a rough day’s trade.

On Thursday morning, Hong Kong was down by more than three per cent, while Tokyo was down by about 2.5 per cent.

Among the biggest losers in Hong Kong was Chinese tech giant Tencent, whose stocks fell more than eight per cent on lacklustre first-quarter results. Elsewhere in the region, 

Australia posted its lowest jobless rate in 48 years, in a potential boost to Prime Minister Scott Morrison two days ahead of tightly contested federal elections. The unemployment rate dipped to 3.9 per cent, the official statistics body said, the lowest rate since 1974.

But stocks in Sydney were still down, as were those in Singapore, Shanghai, Seoul and Taipei, though Jakarta was up by more than two per cent.

Stephen Innes at SPI Asset Management called Wednesday’s losses “the most significant daily decline since June 2020”.“The weakness came as Target’s quarterly earnings added fuel to the recession risk narrative,” he added.

Target, the North American-focused big-box retailer, plunged around 25 per cent after earnings missed expectations despite higher sales. The company pointed to the hit from higher operating costs in results that echoed those of bigger rival Walmart. The retailers said profits were under pressure and some consumers were avoiding discretionary purchases as prices for food, gasoline and other household staples rise.

Retailers said profits were under pressure and some consumers were avoiding discretionary purchases as prices for food, gasoline and other household staples rise

All three major US indices dove, with the Dow sinking more than 1,150 points or 3.6 per cent, and the Nasdaq plunging 4.7 per cent. European bourses were also down.

“The big falls in shares of these retails... highlights the damage inflation is inflicting on the sector’s profit margins,” said Fawad Razaqzada at City Index. “What’s more, consumers are getting squeezed as well and if they now start to cut back on spending then retailers could suffer even further,” he added.

In some of his most hawkish remarks to date, Federal Reserve chair Jerome Powell said on Tuesday that the US central bank would raise interest rates until there is “clear and convincing” evidence that inflation is in retreat.

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