HONG KONG: Equities fell on Wednesday, tracking a drop on Wall Street ahead of A CRUCIAL UNITED STATES INFLATION REPORT later in the day, which could have a huge bearing on the Federal Reserve’s (Fed) plans for raising interest rates.

Investors are preparing for the consumer price figures with a sense of dread as analysts warn a forecastbeating reading would ramp up bets on another big Fed hike and reinforce recession expectations.

The US central bank has said its decision on when and by how much to tighten monetary policy would be driven by data as it struggles to walk a fine line between bringing inflation down from four-decade highs and trying not to damage the economy.

There had been hope that recent indicators showing activity slowing would give the Fed room to be less hawkish. But a biggerthan-predicted jump in jobs last month revived talk of a third straight three-quarter-point hike in September.

“The [Fed policy board] will need to make sure inflation moves back toward target sustainably before contemplating pausing its tightening cycle,” Carol Kong of the Commonwealth Bank of Australia said. “A strong inflation outcome today [is] likely [to] reinforce [the idea that] the [board] is still some way away from that point yet, and see markets readjust higher their expectations for US interest rates.”

Wednesday’s figures come at a sensitive time for world markets, which have been buffeted by a range of other issues, including the war in Ukraine, supply chain snarls and rising China-US tensions over Taiwan.

While the latest earning season has been less painful than feared, there are increasing signs that the economic slowdown is beginning to affect companies, with some major firms — including Apple and Amazon — providing downbeat outlooks.

Chipmaker Micron became the latest, saying revenue would likely come in at the low end of its forecasts in the fourth quarter owing to weak demand. That came a day after rival Nvidia unveiled disappointing results.

Tech firms led losses in New York, with the Nasdaq off more than 1 percent, and they did so in early Asian trade.

Hong Kong led losses, shedding 2 percent, while Shanghai, Tokyo, Sydney, Seoul, Mumbai, Wellington, Taipei, Bangkok and Jakarta also dropped.

Traders were unmoved by the news that China’s consumer price index rose last month to a two-year high, but came in below expectations.

London, Paris and Frankfurt were also down in the morning.

Oil prices sank and remained stuck at about six-month lows, even after news that supplies from Russia to three European countries through Ukraine had been halted as sanctions prohibited the processing of the transit payment.

The cost of the commodity has essentially wiped out all the gains seen since Russia’s invasion of its pro-West neighbor on February 24 as expectations of a recession hit demand forecasts, while consumers are put off buying petrol owing to rising prices.

But Oanda’s Edward Moya said the market would probably not weaken further.

“Whatever crude demand destruction that occurs from a weakening global economy won’t be able to drag down oil prices much lower given how low the supply outlook remains,” he wrote in a note.