Asian shares retreated on Monday with investors distracted by two major data releases that will come from the US this week and China’s persistent Covid problem.
Traders’ focus is on this week’s key Fed meeting and the release of second-quarter US gross domestic product data. While the US central bank is expected to raise interest rates by 75 basis points, the GDP data is likely to be negative again.
Business activity in the United States, the world’s largest economy, contracted for the first time in nearly two years this month.
More Covid-19 flare-ups in China and ongoing concerns over a global recession also weighed on equities.
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Japan’s Nikkei snapped a seven-day winning streak, tracking Wall Street uncertainty ahead of this week’s crucial meetings.
At close, the Nikkei share average was down 0.77% at 27,699.25, retreating from a six-week high marked on Friday. The broader Topix slipped 0.65% to 1,943.21.
China stocks fell as domestic Covid-19 flare-ups and global recession concerns weighed on equities, although real estate companies surged over news Beijing is planning to provide more financial support to the sector.
The Shanghai Composite Index dipped 0.6%, or 19.59 points, to 3,250.39, while the Shenzhen Composite Index on China’s second exchange dropped 0.92%, or 20.06 points, to 2,165.36.
China will set up a real estate fund to help developers resolve a crippling debt crisis, aiming for a war chest of up to 300 billion yuan ($44.4 billion), according to a state bank official.
The Hang Seng Mainland Properties Index jumped 3.4%, and the CSI 300 Real Estate Index rose 1.9%.
Hong Kong Tech Firms Drop
Meanwhile, the Financial Times reported that China is planning to sort US-listed Chinese companies into groups based on the sensitivity of the data they hold, bringing them into compliance with US rules.
But the China Securities Regulatory Commission claimed on Monday it had not studied a three-tier classification of companies.
Tech giants listed in Hong Kong dropped 2%, with index heavyweights Alibaba, Tencent and Meituan down between 2% and 3%.
The Hang Seng Index dropped 0.22%, or 46.20 points, to 20,562.94.
Elsewhere across the region, other Asian stocks also lost ground, as worries about a global economic downturn sapped investors’ risk appetite.
However, shares in Singapore rose as much as 0.9% to their highest since June 9 before cutting gains on inflation data, while Philippine stocks dropped as much as 1.6% to hit their lowest in a week
Indian stocks fell with Mumbai’s signature Nifty 50 index down 0.28%, or 46.40 points, at 16,673.05.
Dollar Index Flat
Globally, stocks headed lower with investors in a cautious mood ahead of what could be the latest Fed signal of an even faster pace of tightening just as signs of a global slowdown mount.
US Treasury Secretary Janet Yellen said on Sunday that US economic growth was slowing but added that a recession was not inevitable. Data, however, suggests the likelihood of a downturn.
“Increased gloom about the outlook for the global economy looks likely to continue in the coming months as fears over elevated inflation, rising interest rates, and Russian gas in Europe continue to weigh on sentiment,” Mark Haefele, global wealth management chief investment officer at UBS said.
The pullback in stock prices follows a rebound in recent weeks, as investors bought back into markets that have fallen sharply this year.
MSCI’s World index dipped 0.2%, although Monday’s fall comes after it hit its highest since June 10 on Friday.
The dollar index, which measures the safe-haven currency against six major peers, was little changed at 106.61, after climbing off a two-and-a-half week low of 106.10 reached on Friday.
The 10-year US Treasury yield was little changed at 2.794% after sliding from as high as 3.083% over the previous two sessions.
Crude oil fell on concern that higher US rates would limit fuel demand growth.
Key figures
Tokyo – Nikkei 225 < DOWN 0.8% at 27,699.25 (close)
Hong Kong – Hang Seng Index < DOWN 0.2% at 20,562.94 (close)
Shanghai – Composite < DOWN 0.6% at 3,250.39 (close)
New York – Dow < DOWN 0.4% at 31,899.29 (Friday close)
- Reuters with additional editing by Sean O’Meara
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