Markets fell again in Asia on Thursday as traders resigned themselves to more US interest rate hikes after minutes from the Federal Reserve's June meeting showed officials felt more needed to be done to rein in inflation.
The notes added to worries about the global economic outlook after another round of depressed data out of China highlighted the tough work facing authorities as they try to kickstart growth after years of zero-Covid-induced pain.
Traders are also awaiting the release of key US jobs data over the next two days as well as Treasury Secretary Janet Yellen's four-day visit to Beijing that aims to stabilise tense relations between the world's two largest economies.
The Fed minutes showed policymakers were split on the decision to stand pat last month after 10 straight increases, surprising some commentators and dealing a blow to hopes the bank was nearing the end of its tightening cycle.
"Some participants indicated that they favoured raising the target range for the federal funds rate 25 basis points at this meeting or that they could have supported such a proposal," they read.
Those backing an increase cited a tight jobs market, stronger-than-expected economic activity and few signs that inflation was on the path to their two per cent target.
In the end, however, all 11 voting members on the policy committee supported the pause, though the minutes said "almost all" agreed more tightening will likely be needed this year.
"It was a little surprising given that the decision (to hold rates steady) was sold as unanimous from Fed officials," said Lindsey Piegza, of Stifel Nicolaus & Co.
"It's pretty clear that there was a divergence of opinions, with some officials pretty clearly giving some reluctance for a one-month pause."
And National Australia Bank's Rodrigo Catril added: "It seems that the hawks were persuaded to toe the line in exchange for the prospects of further tightening later in the year.
"The minutes also show that this bias for further hikes is fuelled by an overriding concern over elevated price pressures and a tight labour market."
Others warned that a cut in borrowing costs, which had been keeping investor sentiment buoyed earlier in the year, was a long way off and officials would likely keep rates elevated for some time.
While growth remains healthy for now, the prospect of even more rate hikes has stoked worries that the Fed could tip the economy into recession, weighing on risk sentiment.
All three main indexes on Wall Street ended in the red as investors returned from the Independence Day holiday.
And Asia followed suit, extending losses from the previous day.
Hong Kong led losses, plunging more than three per cent as tech firms were hit by rate worries while ongoing concerns over the property sector battered banks and developers.
Tokyo suffered hefty selling pressure, while Sydney, Seoul, Singapore, Taipei, Manila, Bangkok and Wellington were also down.
Traders are now keen to see figures on US jobs vacancies, jobless claims and jobs creation, which are due on Thursday and Friday.
The readings will provide a fresh snapshot of the world's top economy and a possible guide to the Fed's plans for rates over the next few months.
Yellen is due to arrive in Beijing later Thursday for a high-level visit aimed at improving communication and mending ties after years of acrimony.
The trip comes just weeks after Secretary of State Antony Blinken paid a rare visit to the country, and observers say it could pave the way for another meeting between President Joe Biden and his Chinese counterpart Xi Jinping.
"The fact that she's spending four days in Beijing, given all of her other domestic and international pressures, underscores the importance she is attaching to this visit," Asia Society Policy Institute vice president Wendy Cutler told AFP.
