Asian stocks fell Friday as a rally fuelled by the likely end of US interest rate hikes ran out of puff, while Alibaba dragged Hong Kong down after saying it would cancel the planned spinoff of its cloud computing arm.
After an exciting few days on trading floors, the week headed for a tepid finish, with Wall Street drifting even as a forecast-beating jump in US jobless claims added to optimism the central bank would not tighten again.
The latest labour market figures follow weaker-than-expected prints on consumer and producer price inflation, which indicated more than a year of rate hikes were having the desired effects.
The readings sparked a surge across markets and sent Treasury yields tumbling, with some traders even entertaining the idea of several cuts to borrowing costs next year.
"This unexpected increase may further reinforce the view that the economic situation may require or at least suggest a shift in the Federal Reserve policy is warranted," said Stephen Innes at SPI Asset Management. "When taken with cool reads on consumer and producer prices, this week's claims update argues, at minimum, against additional Fed hikes."
However, traders remain on edge that the Fed has left the door open to a possible hike if data takes a turn for the worse, leading to warnings the economy could be in danger of slipping into recession.
Those worried about a downturn pointed to unemployment benefits being at their highest in two years, factory production dropping more than forecast and homebuilder sentiment at its weakest in 2023.
In early trade, Sydney, Seoul, Singapore, Manila, Jakarta and Wellington were in the red. Tokyo was marginally lower.
- Taken aback' -
Hong Kong led the losses as market-heavyweight Alibaba was hammered more than nine percent after its shock decision not to spin off its cloud computing arm because of the US-China chip war.
In one of its most wide-ranging restructurings, Alibaba said in March it planned to split the vast group into six distinct entities that would be able to separately pursue funding through public listings.
But on Thursday, it called off the creation of its Cloud Intelligence arm in light of "the recent expansion of US restrictions on export of advanced computing chips".
Washington has cited national security grounds in moving to bar the shipment to China of powerful chips, including those from California-based Nvidia, which are crucial to the development of artificial intelligence.