Asian markets tumble after a tough day on Wall Street

Hong Kong’s Hang Seng tumbled 2.8%, leading losses in the region. Japan’s Nikkei also dropped more than 2%. Korea’s Kospi was down 1.6%. China’s Shanghai Composite Index shed 1%.

Stock futures continued their downward trend on Thursday morning in Asia. The Dow futures were down 0.4%. The S&P 500 futures and Nasdaq futures were down 0.5% and 0.8% respectively.

Elevated inflation readings out of UK and Canada were “a reminder for markets that the fight against inflation among central banks globally will be a challenging process,” said Jun Rong Yeap, a market strategist for IG Group, on Thursday.

“An uptick in Covid-19 cases in China seems to dampen earlier hopes of a quick easing in overall virus restrictions, potentially contributing to the market risk aversion,” he added.

The Chinese economy is likely to contract in the second quarter, as Covid lockdowns wreak havoc on activity. Consumer spending and factory output both shrank sharply last month, while unemployment surged to the highest level since the initial coronavirus outbreak in early 2020.

A top official in China tried once again on Thursday to lift the spirits of its huge tech industry. But markets were still deeply concerned about the growth prospects of the country’s big internet companies.

Those concerns were reinforced Wednesday when Tencent reported zero revenue growth in the first quarter, a worse outcome than expected.

“Despite recent assurances laid out by China authorities, the relief in China tech has proved to be short-lived thus far, as market participants await for more concrete policy follow-through in order to restore longer-term confidence,” Yeap said.