HONG KONG: Asian markets were sharply lower Friday on renewed concerns over the threat from coronavirus variants to the global economic recovery.

Japan's decision to ban fans from most Olympic events, with Tokyo hosting the pandemic-postponed Games under a virus state of emergency, has heightened fears over the spread of infections from new coronavirus strains.

"Covid-19 resurgences remain a key risk for the region, with Japan being the latest to go under a state of emergency to curb spreads ahead of the Tokyo Olympics," IG Asia market strategist Jun Rong Yeap wrote in a note.

"This may suggest a slower recovery ahead with third-quarter GDP growth probably revised lower."

Asian markets down over Fed signal, China tech crackdown

Tokyo led the losses in Asia, falling 1.9 percent, while Sydney, Seoul and Taipei were all down more than one percent. Shanghai fell 0.7 percent.

Hong Kong was a rare bright spot, climbing 0.7 percent on bargain hunting following the previous day's rout which saw the benchmark index fall 2.9 percent.

All three major US indices ended solidly down Thursday, with the Dow shedding 0.8 percent.

"The markets have been supported by expectations on economic growth before ... but now investors question whether the economy will normalise given a new wave of Covid-19 because of new variants and stagnation of economic indications," Okasan Online Securities said.

Oil prices were steady in Asian trade, with Brent hovering around $74 a barrel and WTI around $73.