Asian markets were down on Thursday after Wall Street took one of its heaviest beatings in two years the day before.

Worries about consumer resilience and business profitability were exacerbated by disappointing earnings announcements from retailers on Wednesday, resulting in a volatile day of trading.

Hong Kong had fallen more than 2% by Thursday afternoon, while Tokyo had fallen 1.89 percent.

Chinese IT companies were among the largest declines in Hong Kong after Tencent announced weak results, fueling fears of a bleak earnings season as China’s economic outlook worsens.

Tencent shares fell more than 8% in early trade before recovering marginally, a day after the company reported its worst revenue growth since going public in 2004.

Alibaba dropped more than six percent, while Baidu and Xiaomi were both down.

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 percent, the official statistics body said, the lowest rate since 1974.

But stocks in Sydney were still down, as were those in Singapore, Seoul, and Taipei.

Jakarta and Shanghai eked out small gains.

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, a big-box retailer focusing on North America, fell roughly 25% as results fell short of expectations despite higher sales.

In figures that mirrored those of bigger rival Walmart, the business cited an impact of rising operational costs.

As food, gasoline, and other household necessities prices climb, retailers, say profits are under pressure, and some consumers are avoiding discretionary expenditures.

The Dow Jones Industrial Average fell more than 1,150 points, or 3.6 percent, while the Nasdaq fell 4.7 percent.

European stock exchanges were also lower.

“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 Tuesday that the US central bank would raise interest rates until there is “clear and convincing” evidence that inflation is in retreat.

“We’ve had investors for the most part who’ve lived through three or four decades of declining interest rates, rising multiples for equities and strong earnings for the most part,” Christopher Smart, chief global strategist at Barings LLC, told Bloomberg Television.

“Now you’re entering a very new phase where we’re not really quite sure where inflation is going to level off.”

— Bloomberg News contributed to this report —

– Key figures at around 0700 GMT –
Hong Kong – Hang Seng Index: DOWN 2.39 percent at 20,150.33

Shanghai – Composite: UP 0.33 percent at 3,096.04 (close)

Tokyo – Nikkei 225: DOWN 1.89 percent at 26,402.84 (close)

Brent North Sea crude: UP 1.33 percent at $110.56 per barrel

West Texas Intermediate: UP 0.62 percent at $110.27 per barrel

Euro/dollar: DOWN at $1.0479 from $1.0487

Pound/dollar: DOWN at $1.2346 from $1.2349

Euro/pound: DOWN at 84.88 pence from 84.93 pence

Dollar/yen: UP at 128.58 from 128.54 yen

New York – Dow: DOWN 3.6 percent at 31,490.07 (close)

London – FTSE 100: DOWN 1.1 percent at 7,438.09 (close)