Markets fluctuated in Asia on Thursday following a tepid Wall Street lead as traders contemplated mixed US data, concerns about the fast-spreading Delta variant and indications that the Federal Reserve could begin winding back its ultra-loose monetary policy by the end of the year.
The broad view is that the recovery is still on track while the volatility that gripped the world last week has died down for now, though there remains a certain amount of unease about China's next move after embarking on a surprise crackdown on its tech, private tuition and property sectors.
News that more than 200 million people had now been infected with Covid-19 in just over 18 months highlighted the huge battle governments face in bringing the pandemic under control, with the uneven rollout of vaccines raising concerns about the worldwide recovery.
The key headache now is the highly transmissible Delta strain, which is forcing some governments to reimpose lockdowns or other containment measures, which is blurring the economic outlook.
A major concern is the spike in cases across much of China, the world's second biggest economy and major global growth driver, which some economists warn could put a big dent in its annual growth.
US officials on Thursday indicated that the mutation's spread could be having an effect on the jobs market.
Data by payroll services firm showed US private hiring in July came in at 330,000, the weakest since February while also less than half the previous month and well below expectations.
"The labour market recovery continues to exhibit uneven progress, but progress nonetheless," ADP chief economist Nela Richardson said.
"Bottlenecks in hiring continue to hold back stronger gains, particularly in light of new Covid-19 concerns tied to viral variants."
The figures gave investors reason to think ahead of Friday's government employment report, which some analysts had forecast to show a gain of as much as a million jobs.
- 'Not out of the woods' -
They also offset news that activity in the crucial US services sector hit a record high last month thanks to further business reopenings.
Comments from Fed vice chairman Richard Clarida raised the prospects of the US central bank scaling back its huge bond-buying programme and lifting interest rates as soon as 2023. The ultra-accommodative measures have been a key driver of the rally in global markets from their nadir in March 2020.
He said that as the economy emerges from the pandemic, tapering of the quantitative easing scheme could begin later this year, with analysts tipping a move possibly in November.
The remarks come after a long-running debate about sharp rises in inflation caused by reopenings and people getting back to their daily lives. And while Fed officials have largely said the spikes would be temporary, investors have long thought it will have to tighten policy sooner than expected.
After a soft lead from Wall Street, where the S&P 500 came off a record high, Asia swung through the morning.
Tokyo, Hong Kong, Sydney, Taipei and Jakarta rose but Shanghai, Singapore and Wellington dipped. Seoul and Manila were flat.
"The market's signalling we're not out of the woods yet," Cate Faddis, of Grace Capital, said. "On the other hand, we've had a very strong year. It's rational for the market to take a deep breath."
Oil prices edged up but struggled to make headway into the previous day's big drops, which came on the back of fears over Chinese demand as it imposes lockdowns and after a surprise jump in US inventories.
Both main contracts have lost around a tenth of their value since hitting multi-year highs at the start of July.
- Key figures around 0300 GMT -
Tokyo - Nikkei 225: UP 0.3 percent at 27,678.79 (break)
Hong Kong - Hang Seng Index: UP 0.3 percent at 26,495.89
Shanghai - Composite: DOWN 0.1 percent at 3,473.63
Dollar/yen: UP at 109.67 yen from 109.48 yen at 2100 GMT
Pound/dollar: DOWN at $1.3885 from $1.3891
Euro/dollar: DOWN at $1.1836 from $1.1841
Euro/pound: UP at 85.24 pence from 85.21 pence
West Texas Intermediate: UP 0.4 percent at $68.44 per barrel
Brent North Sea crude: UP 0.3 percent at $70.61 per barrel
New York - Dow: DOWN 0.9 percent at 34,792.67 (close)
London - FTSE 100: UP 0.3 percent at 7,123.86 (close)