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Hong Kong - Most Asian markets turned lower on Friday following a healthy run-up in the week, tracking a sell-off on Wall Street where a plunge in retail giant Macy's fanned concerns about the key US retail sector.
Optimism has been high the past four days on solid US jobs data and moderate Emmanuel Macron's landslide French presidential win Sunday, pushing some markets to multi-year highs.
But traders took a step back ahead of the weekend with confidence rattled by a series of below-par Chinese data and Donald Trump's shock firing of the head of the FBI, which some fear could lead to a crisis that will knock the president's economy-boosting agenda offline.
On Thursday New York's three main indexes turned negative after Macy's announced a 39% fall in net profit, its latest in a series of weak readings that have have underscored the deterioration of bricks-and-mortar stores due to the rise of e-commerce.
The figures hit other big-name stores and with the retail sector a crucial driver of the world's top economy, there are fears about the outlook for top retailers.
By the break on Friday Tokyo's Nikkei index was down 0.7% from a 17-month high, while Sydney shed 0.7% and Singapore gave up 0.1%. Seoul, which closed Thursday at a record high, eased 0.4%.
But Hong Kong was up 0.1% after a four-day rally, while Shanghai - which has fallen about 7% in the past month on worries about a state crackdown on leveraged investing - also gained 0.1%.
The dollar turned lower against its major peers, having enjoyed a surge Thursday on comments from a top Federal Reserve official backing three more interest rates this year.
The unit "is weighed down by the Trump/Comey sideshow which has seen the greenback move lower against" major currencies, Stephen Innes, a senior trader at forex firm OANDA, said in a commentary.
And on oil markets both main contracts pressed on with their recovery from last week's sharp losses, with investors cheering a bigger-than-expected drop in US inventories and signs an OPEC output cut was kicking in.
Retailer shares plunge in US
Weak earnings from Macy's sent shares of American retailers plunging on Thursday, pushing US equity indices lower and ending a four-day streak of records for the Nasdaq.
The declines in the US came on a down day in Paris and Frankfurt for stocks, while London was flat and Tokyo up. The British pound retreated after the Bank of England kept interest rates unchanged and lowered its economic growth forecasts.
Macy's plunged 17.0% after reporting a 39% drop in first-quarter earnings to $70 million, its latest in a series of poor results that have underscored the deterioration of brick-and-mortar stores due to the rise of e-commerce.
"Consumers, increasingly comfortable with buying a wider selection of goods online, have opted for price and convenience of the Internet," said Jack Ablin, chief investment officer at BMO Private Bank. "Expect this trend to continue."
Macy's was among the first major retailers to report earnings, establishing a gloomy precedent for the results to come. Several retailers scheduled to report in the coming days also retreated, including Gap, which lost 3.6%, Target, which shed 4.0% and Dow member Wal-Mart Stores, which declined 0.7%.
Analysts also cited lingering worries about President Donald Trump's firing of FBI director James Comey and said investors had incentives to take profits after the rally over the last month.
"It's more or less profit-taking and maybe some creeping worries over the firing of Comey," said Peter Cardillo, chief market economist at First Standard Financial.
"Of course, we haven't seen any fear factor developing over that, but if the situation should worsen, the market could be subject to that."
Pound falls, oil rises
The Bank of England's decision to keep interest rates unchanged came as it trimmed its 2017 growth forecast to 1.9% from 2.0%
However, the central bank suggested it could raise rates more sharply than expected if Brexit talks go smoothly and the economy remains stable.
Ahead of the update, official data showed that UK industrial output slipped 0.5% in March to record a third monthly drop in a row.
Oil prices rose for a second day in a row following strong US petroleum data Wednesday that raised hopes of rising demand as the American holiday driving season kicks off.
Traders have also been buoyed by hopes that OPEC and Russia's much-vaunted output cuts that started in January appear to be gaining traction, with the key producers also likely to extend the agreement past its end-June deadline.
And on Thursday, the OPEC cartel called on oil producers to make "collective efforts" to match supply and demand in the oil market in the face of rising output in the US.
All of which is welcome news for oil traders after last week's plunge in prices that came on the back of worries about rising US, Nigeria and Libya output, and a slowdown in key market China.
"We saw the biggest draw in inventories for the year last week with stockpiles down more than five million barrels," said Greg McKenna, chief market strategist at AxiTrader.
"And it looks like OPEC's production cut is finally biting," he added.
