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Asian stocks fell on Thursday after Wall Street hit the brakes on its big rally amid disappointing corporate earnings reports and warnings the market had risen too far, too fast.
US futures rose while oil prices fell as data showed an unexpected rise in US inventories.
The Nikkei 225 index in Tokyo fell 1.6% to 33,140.47, with Japanese automaker Toyota leading the benchmark's losses with a fall of up to 4%. The company said Wednesday it is recalling one million vehicles because of a defect that could cause airbags to fail to deploy, increasing the risk of injury.
This came in addition to news that Toyota's small car subsidiary Daihatsu had stopped shipping all of its vehicles in Japan and abroad after an investigation found faulty safety tests were carried out on 64 models, including some for Toyota, Mazda and Subaru . Officials from Japan's Transport Ministry searched Daihatsu's offices on Thursday.
Australia's S&P/ASX 200 slipped 0.5% to 7,504.10. South Korea's Kospi lost 0.6% to 2,600.02. Hong Kong's Hang Seng was flat at 16,617.87, while the Shanghai Composite rose 0.6% to 2,918.71.
India's Sensex was 0.2% higher and Bangkok's SET rose 0.2%.
Wednesday's losses on Wall Street were widespread, with about 95% of companies in the S&P 500 posting losses.
The S&P 500 fell 1.5% to 4,698.35, marking its worst loss since a huge rally began just before Halloween. The Dow Jones Industrial Average fell 1.3% from its record high to 37,082.00, while the Nasdaq Composite fell 1.5% to 14,777.94.
FedEx slumped 12.1%, posting one of the market's biggest losses, after the company reported weaker sales and profits than analysts expected for its latest quarter. Due to demand pressure, the company now also assumes that sales for the entire financial year will decline compared to the previous year and will not remain approximately the same.
The package delivery company is boosting trade around the world, and its signal of potentially weaker demand could dim the hope that fueled Wall Street's recent rally: that the Federal Reserve can give the economy a perfect landing by shoring it up slows enough to suppress high inflation not so much that it triggers a recession.
Winnebago Industries shares fell 5.6% after also falling short of analysts' earnings expectations for the latest quarter.
General Mills, which sells Progresso soup and Yoplait yogurt, reported higher-than-expected profit for its latest quarter, but sales fell short as the recovery in sales volume was slower than expected. The stock fell 3.6%.
Still, two reports showed that the U.S. economy overall could be in stronger shape than expected. Both consumer confidence in December and sales of occupied homes in November improved more than economists expected.
Encouraging signs that global inflation is cooling continue to mount. In the UK, inflation unexpectedly slowed to 3.9% in November from 4.6% in October, reaching its lowest level since 2021.
The slowing price rise raises hopes that in 2024 central banks around the world can move away from their campaigns to sharply raise interest rates to control inflation. The Federal Reserve in particular is widely expected to see its key interest rate fall by at least 1.50 percentage points to 5.50% from the current 5.25% in 2024, the highest level in more than two decades.
On these hopes, government bond yields have fallen since the end of October and fell again following the UK inflation report.
The yield on the 10-year Treasury note rose to 3.86% from 3.85% late Wednesday.
In other business, U.S. benchmark crude oil fell 8 cents to $74.14 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, lost 7 cents to $79.63 a barrel.
The US dollar fell to 143.15 Japanese yen from 143.56 yen. The euro rose to $1.0945 from $1.0943 late Wednesday.
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