TOKYO - Equity markets sank Friday and oil extended a sharp selloff after a string of interest rate hikes by central banks revived worries about the global economy.
Eyes are also on Tokyo after forecast-beating inflation figures fuelled speculation on whether the Bank of Japan will shift away from its ultra-loose monetary policy that has dragged on the yen.
The optimism that characterised the first half of June -- fuelled by hopes the Federal Reserve was close to the end of its hiking cycle -- has given way to concern that officials still had several more in them as they battle stubborn price rises.
Last week's decision to stand pat after 10 straight increases added to the sense of hope, but warnings Wednesday from boss Jerome Powell that more work was needed took the wind out of traders' sails.
He told US lawmakers that two more this year was "a pretty good guess".
His comments came as the Bank of England lifted rates more than expected, while officials in Switzerland and Norway also tightened. That followed hikes last week in the eurozone, Australia and Canada.
And Turkey, which for two years had followed President Recep Tayyip Erdogan's unorthodox policy of dealing with high inflation by cutting rates, changed course and nearly doubled its borrowing costs.
However, some observers are sceptical the Fed will follow through with its warnings as US inflation continues to subside, falling to 4.0 percent in May from 4.9 percent in April. The Fed's target is 2.0 percent.
While the S&P 500 and Nasdaq edged up, there was little excitement on Wall Street.
And Asia extended the week's poor run.
Hong Kong and Tokyo each lost more than one percent, while Sydney, Seoul, Singapore, Manila and Wellington were also in the red.
Oil prices also fell, having tumbled around four percent Thursday on fresh demand concerns caused by the prospect of rates going ever higher, while China's ongoing struggles were also weighing on sentiment.
Traders are keeping an eye on Beijing after a hoped-for raft of stimulus measures for the economy came to nothing. While the central bank has cut borrowing costs there has been very little by way of policy detail from officials.