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Stocks dropped in Asia yesterday on renewed worries about a gloomy economic outlook as monetary policy tightens in much of the world to fight high inflation.

An Asian equity index snapped a four-day climb, shedding more than 1 percent.

US futures steadied after a tech-led tumble in the S&P 500 on Tuesday. Institutional portfolio rebalancing may be impacting trading.

China’s bourses were in the red too but the losses were relatively modest.

In a surprise move, the nation Tuesday reduced quarantine times for inbound travellers. That hinted at an eventual shift away from a strategy of stamping out Covid-19 that involves great economic cost via lockdowns and travel curbs.

The dollar held gains after rising the most in over a week in the Wall Street session.

Treasuries inched up, leaving the 10-year yield at 3,16 percent. Oil slipped toward US$111 a barrel. In cryptocurrencies, bitcoin continued to hover around the US$20 000 level.

Investors appear sceptical that the Federal Reserve can avoid a bruising economic downturn amid sharp interest-rate hikes.

Evaporating consumer confidence is feeding into concerns that the US might tip into a recession.

“The Fed still believes it can thread that very fine line between tightening financial conditions while not hurting the economy too much,” Emily Weis, a macro strategist at State Street Corp., said on Bloomberg TV.

“We’re still not sure they’re going to be able to pull that off. That’s what we’ve seen reflected in the markets over the last month or so.”

In China, the recent step to reduce quarantine for inbound travellers led to a relief rally, but the Covid-19-zero policy is still well entrenched, which will likely lead to regular reopening disruptions, she added.

US officials sought to play down recession risk. New York Fed President John Williams and San Francisco’s Mary Daly both acknowledged they had to cool inflation, but insisted that a soft landing was still possible.

In Europe, central bank President Christine Lagarde affirmed plans for an initial quarter-point rate increase in July but said policy makers are ready to step up action to tackle record inflation if warranted. — Bloomberg.