Asian stocks slipped on Wednesday with investors in pessimistic mood as China’s services activity slowed and more interest rate hikes loomed.
A private-sector survey showed China’s services expanded at their slowest pace in five months in June, while escalating Sino-US tensions also dented sentiment across the region.
In Japan, the benchmark Nikkei share average fell for a second day as investors also continued to book profits after a recent rally.
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The Nikkei index lost 0.25% to close at 33,338.70 but recouped most of its 1% declines earlier in the session. The broader Topix ended almost flat, down 0.02% at 2,306.03.
Pharma giant Daiichi Sankyo surged 6.82% to become the top gainer on the Nikkei after tanking nearly 15% in the previous session. The pharmaceutical sector rose 1.78%, with Sumitomo Pharma jumping 3.5%.
Chinese stocks fell too after the Caixin/S&P Global services purchasing managers’ index (PMI) eased to 53.9 in June from 57.1 in May, as weakening demand weighed on post-pandemic recovery momentum.
US Secretary of Treasury Janet Yellen will visit China later this week but escalating tensions in the tech space, with Beijing restricting exports of two chipmaking metals and Washington reportedly banning Chinese firms from accessing cloud computing, weighed on broader sentiment.
The Shanghai Composite Index fell 0.69%, or 22.40 points, to 3,222.95, while the Shenzhen Composite Index on China’s second exchange retreated 0.84%, or 17.30 points, to 2,051.52.
Hong Kong’s Hang Seng Index dropped 1.57%, or 305.30 points, to 19,110.38 while the Hang Seng China Enterprises Index fell 1.87%.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore, Taipei, Wellington and Manila were also in the red while Mumbai edged ahead. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.6%.
Yen Remains Weak
Globally, market conditions were subdued following the Independence Day public holiday on Wall Street on Tuesday. Eurostoxx 50 futures slipped 0.2%, while both S&P 500 futures and Nasdaq futures eased 0.1%.
Traders are now looking ahead to the release of the minutes of the Fed’s last policy meeting later on Wednesday and the non-farm payrolls report on Friday to see whether the Fed would need to hike more than once to contain inflation.
Markets are almost certain that the Fed will hike in July after pausing last month but have only priced in a 32% chance that the central bank would need to deliver another hike by October.
In the currency markets, moves were largely muted. The yen eased 0.1% to 144.63 per dollar, just a touch below 145.07, which was its weakest in eight months when fears of official intervention were rife.
The Australian dollar slid as well as the Chinese yuan on China services PMI data.
Short-term Treasury yields eased 2 basis points to 4.9152% while 10-year yields were little changed at 3.8546%.
Oil prices gave up some of their gains after advancing on supply concerns stemming from production cuts by top producers Saudi Arabia and Russia. Brent crude futures fell 0.5% to $75.83 a barrel after climbing 2.1% overnight.
Gold prices were flat at $1,925.49 per ounce.
Key figures
Tokyo – Nikkei 225 < DOWN 0.25% at 33,338.70 (close)
Hong Kong – Hang Seng Index < DOWN 1.57% at 19,110.38 (close)
Shanghai – Composite < DOWN 0.69% at 3,222.95 (close)
London – FTSE 100 < DOWN 0.51% at 7,481.73 (0935 GMT)
New York – Dow <> CLOSED TUESDAY
- Reuters with additional editing by Sean O’Meara
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