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Picture: BLOOMBERG/SOICHIRO KORIYAMA
Picture: BLOOMBERG/SOICHIRO KORIYAMA

Hong Kong — Asian shares stayed stuck at seven-month lows on Wednesday, as markets digest a storm in Chinese equity markets, while currency markets were quiet with traders wary of placing large bets before the outcome of a Federal Reserve meeting.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.31% in morning trading. Markets in Hong Kong and mainland China stabilised after a sharp sell-off in the previous session, balancing declines elsewhere in Asia.

Asian shares have fallen in each of the three previous sessions as regulatory crackdowns in China roiled stocks in the technology, property and education sectors, leaving international investors bruised.

Chinese state-run financial media urged calm first thing on Wednesday morning, and while Chinese shares swung back and forth in early trading, they did not repeat the sharp plunges seen earlier in the week.

Chinese blue chips were last flat, having had a volatile start to the day, and the Hong Kong benchmark gave up early gains to fall 0.24%. Both were still near eight-month lows.

The embattled Hang Seng Tech Index was last flat, also after a volatile morning, a day after touching its lowest level since the index's creation in July 2020. It is still down about 40% from its February high.

Japan’s Nikkei slid 1.15% to a six-month low, with shares in SoftBank Group, a major investor in Chinese tech, falling 3.68%.

US stock futures, the S&P 500 e-minis, were flat.

“China and the Fed are the two key things for today,” said Tai Hui, chief market strategist for Asia-Pacific at JPMorgan Asset Management.

“We are still trying to digest the news from China, what’s going to be new is how the Fed view the latest round of (Covid-19) infections and whether they need to readjust their view,” he said.

The statement from the Fed policy meeting, and a press conference from chair Jerome Powell are due at 6pm GMT.

Markets will be watching closely for any hints on when the Fed will start reducing its purchases of government bonds and any fresh insight into its views on inflation and economic growth.

The declines in Asian equities on Tuesday spread to other markets overnight, causing Wall Street to retreat a little from the record highs set earlier in the week.

The Dow Jones Industrial Average ended Tuesday down 0.2%, the S&P 500 shed 0.5% and the Nasdaq Composite slid 1.2%. Earlier, the pan-European Stoxx 600 index finished 0.54% lower.

After the US close, Google parent Alphabet, Microsoft, and Apple all reported record quarterly earnings, though the smartphone maker’s shares slid in after-hours trading on the back of a slower growth forecast.

In currency markets, the dollar sat below recent highs after a month-long rally, the safe-haven yen gained and the risk-sensitive Australian and New Zealand dollars dropped back.

Analysts at CBA attributed the moves to falling risk sentiment on the back of the Chinese regulatory crackdown.

The yield on benchmark 10-year treasury notes rose a little to 1.2478% from a US close of 1.234% on Tuesday.

Oil prices rose as industry data showed US crude and product inventories fell more sharply than expected last week, outweighing worry about the consequences of surging Covid-19 cases.

US crude ticked up 0.73% to $72.17 a barrel and Brent crude rose 0.54% to $74.93 a barrel.

Gold prices firmed above the key psychological level of $1,800, while bitcoin rose about 1%, trading either side of $40,000.

Reuters

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