Asian markets sank Friday as a mini rally came to a juddering halt ahead of a keenly awaited speech by Federal Reserve boss Jerome Powell later in the day, with traders increasingly worried the bank will hike interest rates further.
The losses tracked a sell-off on Wall Street, where tech titans including Amazon and Apple were among the big losers as Treasury yields rose and data indicated the US jobs market was still resilient in the face of tighter financial conditions.
The Fed's insistence that decision-making would be data-dependent has seen traders react to most economic indicators in a "good news is bad news" fashion, with healthy data seen as likely pressuring officials to hike to temper inflation.
A string of positive readings on the economy and jobs have weighed on equities this month, while policymakers appear split on the best way forward as they try to tame prices while looking to avoid causing a recession.
Markets enjoyed a strong end to July on optimism that that month's rate hike would be the last, with inflation continuing to ease and other data showing a softening in the economy. Some observers even suggested a cut could be on the cards at the end of the year or early 2024.
But that has given way to the realisation that more work is needed to get inflation down to -- and held at -- the Fed's two per cent target.
Analysts said Powell must tread a fine line in his Friday speech at the annual symposium of central bankers and business leaders in Jackson Hole, Wyoming.
"He will caution against easing too soon. I think that's going to be a theme here," former Fed vice chair Donald Kohn said.
"It would be actually helpful for him to spell out what he means by data-dependence, tamping down the very strong reaction of markets to each piece of data."
And Krishna Guha, of Evercore ISI, added the Fed chief would likely avoid saying when rates would be at an ideal level when they are neither boosting nor restricting the economy.
"Expect a balanced assessment with no abrupt hawkishness, but no 'Mission Accomplished'," he said. "The Fed has not come this far to let inflation slip out of its grasp."
A hawkish speech at last year's Jackson Hole gathering sent shivers through world markets. European Central Bank head Christine Lagarde is also due to speak later in the day.
Data showing fewer jobless claims last week dented sentiment in New York, while profit-taking after a Nvidia-fuelled tech surge added to the selling pressure.
Meanwhile, differing views from Fed officials provided little help.
Boston Fed boss Susan Collins told Yahoo! Finance she thought more increases were needed, while Philadelphia head Patrick Harker thought they would stay where they are -- at a two-decade high -- telling CNBC that "we've probably done enough."
Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Mumbai, Bangkok, Wellington, Taipei and Manila were all in the red. However, London edged up at the open while Frankfurt and Paris were flat.
"Heading into the Jackson Hole Fed event, the market might be leaning excessively towards a dovish outlook, evident in its mere 16 per cent probability of a rate hike," said SPI Asset Management's Stephen Innes.
"This perspective contrasts with the recent labour market data... So, I suspect the market is going through a reality hedging check just in case Chair Powell keeps the rate hike pedal to the metal for longer."
China's economic woes continue to drag on sentiment and, in an attempt to staunch losses in markets, Beijing officials urged the country's pension fund as well as some large banks and insurers to buy up equities.
That follows similar calls for funds and big institutions to stop offloading shares and companies to buy their own stock.
However, traders appeared to brush off the pleas, while fresh pledges to ease home-buying rules to support the property sector also fell on deaf ears.
