Asian stocks were on the back foot on Wednesday as the week-long rally over optimism on the US economy finally ran out of steam, while currency woes and a big tech sale also weighed.
Bond yields and the dollar fell ahead of the release of the latest key US economic data, and speeches from policymakers that are expected to make the case for interest rate cuts.
Japan’s Nikkei share average edged down as yen gains weighed on domestic stocks. The Japanese currency strengthened back to the 145 levels per dollar after falling as far as 147.34 the previous day, although a halt in the yen’s rise helped narrow equity losses in the Asian afternoon.
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A stronger yen tends to drag on exporter shares as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.
The main Tokyo bourse finished 0.29% lower at 37,951.80 after falling 1% in early trade, while the broader Topix fell 0.21% to 2,664.86.
Markets now await the release of preliminary benchmark revisions to US employment data for the 12 months through March, due later on Wednesday.
A revision closer to 1 million fewer jobs created than previously estimated could renew concerns about the US labour market and generate more market volatility.
Hong Kong stocks dropped, as shares of e-commerce giant JD.com tumbled after its biggest shareholder Walmart sold its stake in the firm, while China stocks edged down. JD.com tumbled 8.73% and dragged tech shares down 2.1% in Hong Kong.
Electric vehicle maker Xpeng fell 2.4% after it forecast third-quarter revenue below analysts’ expectations and missed June-quarter sales estimates.
The Shanghai Composite Index fell 0.35%, or 10.08 points, to 2,856.58, while the Shenzhen Composite Index on China’s second exchange retreated 0.28%, or 4.27 points, to 1,521.41.
China’s blue-chip CSI300 index was down 0.33% with, earlier in the session, its financial sector sub-index lower by 0.58%, the consumer staples sector falling 0.1%, the real estate index down 1.38% and the healthcare sub-index down 0.22%.
Chinese H-shares listed in Hong Kong – stocks belonging to companies from the Chinese mainland – fell 1.2% to 6,121.49. The Hang Seng Index dropped 0.69%, or 120.07 points, to 17,391.01.
Gold, Yen Strengthen
Elsewhere across the region, in earlier trade, Sydney, Singapore and Taipei also retreated, though Seoul, Mumbai, Manila and Jakarta eked out gains. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5%.
Later on Wednesday a downward revision is expected to US labour data, which would support cutting interest rates. Federal Reserve minutes are also expected to reinforce a dovish stance.
And on Thursday, US and global purchasing managers’ index surveys are due while Federal Reserve Chair Jerome Powell is due to make a speech at the Jackson Hole symposium in Wyoming on Friday.
The falling dollar has launched gold to record highs and returned the yen to 145.67 per greenback, a gain of 1.6% for the week so far and some 11% higher than last month’s 38-year trough.
The euro is up nearly 3% for August to date and, at $1.1132 in Asia trade, is at its highest since early December and testing major chart levels.
Interest rate futures have priced in a 25 basis point (bps) US rate cut next month, with a one-third chance of a 50 bps cut. Almost 100 bps in cuts are priced in for this year, and another 100 bps next year.
The mood kept bond markets supported and 10-year US Treasury yields nudged lower to 3.81%, while two-year yields hovered at 3.99%.
Commodity prices stabilised with Brent crude futures at $77.12 a barrel.
Gold prices hovered at $2,516 an ounce, just below record levels touched on Tuesday.
Key figures
Tokyo – Nikkei 225 < DOWN 0.29% at 37,951.80 (close)
Hong Kong – Hang Seng Index < DOWN 0.69% at 17,391.01 (close)
Shanghai – Composite < DOWN 0.35% at 2,856.58 (close)
London – FTSE 100 > UP 0.06% at 8,278.30 (0933 BST)
New York – Dow < DOWN 0.15% at 40,834.97 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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