Asian stocks slipped again on Wednesday with investors nervous ahead of the release of the latest US inflation data, while the TV clash between Presidential hopefuls Donald Trump and Kamala Harris put traders even more on edge.
The presidential hopefuls clashed over abortion, the economy, immigration and Trump’s legal woes in a bitter first debate, leaving investors skittish ahead of US prices figures that could influence the Fed’s policy moves next week.
Japan’s Nikkei share average fell for a seventh straight session amid widespread losses, as the yen’s rally to its strongest against the dollar this year weighed.
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The Nikkei closed down 1.49% at 35,619.77, after slumping over 2% to brush near Monday’s one-month intraday low of 35,247.87. The broader Topix fell 1.78% to end the session at 2,530.67.
The dollar dropped as much as 1.24% to 140.71 yen, a level not seen since December 28, before trading at 141.16 yen as of 0547 GMT, following the US presidential debate.
A stronger yen tends to hurt exporter shares as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.
Shares of exporters slid, with the underperformance of automakers standing out. Toyota Motor stumbled 3.1%, while Subaru Corp declined over 4% and Honda Motor slid 3%.
Energy-related shares also saw some of the largest losses after oil prices hit their lowest in three years on Tuesday on demand concerns.
Chinese stock markets fell as well, with shares in energy companies leading losses as they tracked the fall in oil prices, though slightly slimmer chances of Republican candidate Trump winning the US presidency helped exporters’ shares.
Betting markets shortened the odds of Democrat Harris winning the US presidency following the televised debate, and traders sold dollars and bought yuan with the risk of punitive tariffs on Chinese goods seen as slightly reduced.
Oil, Gas Slip
China’s blue-chip CSI300 index was down 0.30% with, earlier in the session, its financial sector sub-index lower by 1.12%, and the oil and gas industry sub-index shedding 2.6%. The electric vehicle index rose 2.7%.
The Shanghai Composite Index dipped 0.82%, or 22.40 points, to 2,721.80, while the Shenzhen Composite Index on China’s second exchange edged back 0.05%, or 0.72 points, to 1,499.53.
The yuan was quoted at 7.1131 per US dollar, 0.1% firmer than the previous close of 7.12.
Chinese H-shares listed in Hong Kong – stocks belonging to companies from the Chinese mainland – fell 1.46% to 5,938.54, while the Hang Seng Index was down 0.73%, or 125.38 points, to 17,108.71, and the sub-index tracking energy shares dipped 4.7%.
So far this year, the Shanghai stock index is down 8.6% and the CSI300 has fallen 7.3%, while China’s H-share index listed in Hong Kong is up 2.9%.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Taipei, Mumbai, Bangkok, Jakarta, Wellington and Manila were also in the red, though Singapore edged up slightly. The MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.3%.
European stock markets were set for a soft open, with Eurostoxx 50 futures 0.19% lower, German DAX futures little changed and FTSE futures down 0.17%.
Fed Rate Cut Bets
The dollar index, which measures the US currency against six peers, was down 0.3% at 101.34, with the yield on the benchmark US 10-year Treasury note easing 2.4 basis points to 3.62%.
Investor focus will now be on the US Labor Department’s consumer price index report later on Wednesday for policy clues although the Federal Reserve has made it clear employment has taken on a greater focus than inflation.
The headline CPI is expected to have risen 0.2% on a month-on-month basis in August, according to a Reuters poll, unchanged from the previous month.
While the Fed is widely expected to cut interest rates next week, the size of the rate cut is still up for debate, especially after a mixed labour report on Friday failed to provide clarity on which way the central bank could go.
Markets are currently pricing in 65% chance of the US central bank cutting rates by 25 basis points, while 35% chance is ascribed for a 50 bp cut when the Fed delivers its decision on September 18, the CME FedWatch tool showed.
In commodities, oil prices stabilised on Wednesday after dropping over 3% in the previous session, but still hovered near their lowest in three years after OPEC+ revised down its demand forecast for this year and 2025.
Brent crude futures was last 0.43% higher at $69.49 a barrel. US West Texas Intermediate (WTI) crude rose 0.46% to $66.03 a barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 1.49% at 35,619.77 (close)
Hong Kong – Hang Seng Index < DOWN 0.73% at 17,108.71 (close)
Shanghai – Composite < DOWN 0.82% at 2,721.80 (close)
London – FTSE 100 < DOWN 0.08% at 8,199.68 (0933 BST)
New York – Dow < DOWN 0.23% at 40,736.96 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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