© Reuters. FILE PHOTO: A broker is shown near a computer screen showing movements in the stock market since the morning open at the Colombo Stock Exchange on February 6, 2014. REUTERS / Dinuka Liyanawatte / File Photo
By Wayne Cole
SYDNEY (Reuters) – Asian stock markets stumbled on Wednesday as an outbreak of risk aversion boosted bonds and the dollar as investors braced for minutes from the latest Federal Reserve meeting, which could confirm a aggressive turn in US monetary policy.
Distributors struggled to find a single catalyst for the sudden mood swing, but China’s crackdown on tech companies clearly had an impact.
Hong Kong shares fell another 0.9% to nearly six-month lows, while US-listed private transport company Didi Global Inc lost more than 20% in New York. Alibaba (NYSE 🙂 Group, Baidu Inc (NASDAQ 🙂 and JD (NASDAQ :). Com fell.
MSCI’s broader Asia-Pacific stock index outside of Japan was down 0.6%, while it was down 1.2%.
Against the trend, Australian stocks managed to consolidate 0.7% and Chinese top-tier stocks added 0.8%.
EUROSTOXX 50 futures and futures added 0.1%, while Nasdaq futures and barely moved.
Wall Street had been disrupted by a survey that showed a slight cooling in the red-hot US services sector, although at 60.1 the ISM index remained historically high.
“Normally, any ISM reading close to 60 or more would be considered solid, but the details play on the idea that there is a speed limit to recovery amid shortages of inputs and labor, along with costs still high. “said Rodrigo Catril, senior FX strategist at NAB.
The nervous mood helped Treasuries extend their recent rally with US 10-year bond yields falling almost 8 basis points overnight to 1,348%. That was the lowest since February and also the biggest daily decline since February.
Longer-term debt outperformance caused the yield curve to flatten, which could be a gamble that the Fed will preemptively tighten policy to avoid inflation.
Minutes from the Fed’s June monetary policy meeting due later Wednesday could show how serious members were about cutting asset purchases and how early hikes could begin.
Expectations of an aggressive tone helped the dollar rise against a basket of currencies to 92,543, from a low of 92,003 on Tuesday. The euro fell to $ 1.1823, close to its lowest level since March, while commodity currencies fell.
The dollar was less fortunate with the safe-haven yen, holding at 110.57.
“We now expect a period of broad USD strength in the coming quarters,” said Kim Mundy, senior currency strategist at CBA.
“Our view comes down to the outperformance of the US economy over a period, so we have lowered our short-term outlook for all currencies we monitor against the USD.”
In commodities markets, the dollar rebound offset the overall downside mood for risk to leave gold steady at $ 1.797 an ounce after briefly reaching as high as $ 1.814 overnight.
Oil prices had lost some gains recently after OPEC producers canceled a meeting when major players were unable to reach an agreement to increase supply.
NatWest Markets analysts said the absence of an agreement on expanding production was positive for prices in the short term, but could be a disadvantage over time.
“The lack of agreement between the major oil producers at least opens up the risk of the entire OPEC + agreement collapsing, leading the major oil producers to significantly increase production much faster,” they said in a note.
The market was calmer Wednesday, rising 3 cents to $ 74.56 a barrel, while adding 12 cents to $ 73.49.