Asian shares mostly fall amid worries about slowing economy

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TOKYO (AP) — Asian shares were trading mostly lower Thursday as investors turned their attention to upcoming earnings reports and other economic indicators.

Japan's benchmark Nikkei 225 shed 1.1% in morning trading to 27,507.65. Australia's S&P/ASX 200 slipped 0.3% to 7,214.90. South Korea's Kospi fell nearly 0.8% to 2,476.08. Hong Kong's Hang Seng was virtually unchanged, inching up less than 0.1% to 20,277.01. The Shanghai Composite slipped less than 0.1% to 3,312.22.

While efforts to cool inflation by raising interest rates are designed to slow overheated economies, the worry is that central bank policymakers might overdo it, leading to recession.

Many regional economies are seeing weakness in exports due to softer demand in major markets like the United States. That has dulled the impact of a rebound in China as its economy recovers from pandemic-related disruptions.

Stocks on Wall Street mostly slipped Wednesday following the latest signals that the U.S. economy is slowing under the weight of much higher interest rates.

“Wall Street is realizing that you need a strong economy to keep stocks heading higher,” Edward Moya of Oanda said in a commentary. “The US economy is clearly in slowdown mode and expectations should be for further labor market weakness.”

The S&P 500 dipped 0.2% to 4,090.38 and the Dow Jones Industrial Average rose 0.2% to 33,482.72. But the Nasdaq composite dropped 1.1% to 11,996.86.

One report from the Institute for Supply Management said that growth in the U.S. services sector slowed last month by more than economists expected, as the pace of new orders cooled. A separate report suggested private employers added 145,000 jobs in March, down sharply from February's 261,000. Perhaps more importantly for markets, pay raises also weakened for workers, according to the ADP Research Institute.

“Our March payroll data is one of several signals that the economy is slowing,” said Nela Richardson, chief economist at ADP. “Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.”

ADP’s private payroll report could offer a preview of what Friday’s more comprehensive jobs report from the U.S. government will show. Economists expect it to say employers added 240,000 jobs last month, down from 311,000 in February.

If the job market really is slowing from the strong growth that's helped to prop up the larger economy recently, it could offer the Fed reason to pause on its hikes to interest rates.

That’s a big deal for markets not only because it could lessen the odds of an upcoming recession, which some economists already see as a high probability. Higher rates also drag on prices for stocks, bonds and other investments.