© Reuters. FILE PHOTO: A man wearing a protective face mask walks past a screen displaying a graph showing recent Nikkei share average movements outside a brokerage, amid the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan December 30, 2020. REUTERS/Issei
By Alun John
HONG KONG (Reuters) – Asian shares stayed stuck at seven-month lows on Wednesday, as markets continued to digest a storm in Chinese equity markets, while the dollar rested with traders reluctant to place large bets ahead of the outcome of the Federal Reserve meeting.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.35% in early trading, having fallen in each of the three previous sessions as regulatory crackdowns in China roiled stocks in the technology, property and education sectors, leaving international investors bruised.
slid 1.01%, Chinese bluechips dropped 1.51%, and Australian shares fell 0.43%. Hong Kong bucked the trend, rising 0.63%, after closing at its lowest level since November the day before.
“China and the Fed are the two key things for today,” said Tai Hui, chief market strategist for Asia Pacific, at JPMorgan (NYSE:) Asset Management.
Major questions were whether markets would stabilise as they processed the news out of China and whether the spread of the Delta variant posed a risk to growth in the United States and Europe, he added.
“We are still trying to digest the news from China, what’s going to be new is how the Fed view the latest round of (COVID-19) infections and whether they need to readjust their view,” he said.
The statement from the Fed policy meeting, and a press conference from chairman Jerome Powell are due at 2 p.m. EDT (1800 GMT).
Markets will be watching closely for any hints in relation to inflation, economic growth, interest rates and when the Fed will likely start reducing its purchases of government bonds.
The declines in Asian equities on Tuesday spread to other markets overnight, causing Wall Street to retreat a little from the record highs set earlier in the week.
The ended Tuesday down 0.2%, the shed 0.5% and the slid 1.2%. Earlier the pan-European index finished 0.54% lower.
After the U.S. close, Google parent Alphabet (NASDAQ:) Inc, Microsoft (NASDAQ:), and Apple (NASDAQ:) all reported record quarterly earnings, though the smartphone maker’s shares slid in aftermarket trading on the back of a slower growth forecast.
In currency markets, the U.S. dollar sat below recent highs after a month long rally, the safe-haven yen gained and the risk-sensitive Australian and New Zealand dollars dropped back.
Analysts at CBA attributed the moves to falling risk sentiment on the back of the Chinese regulatory crackdown.
Oil prices rose as industry data showed and product inventories fell more sharply than expected last week, outweighing worries about the consequences of surging COVID-19 cases.
U.S. crude ticked up 0.47% to $72.01 a barrel and rose 0.35% to $74.77 per barrel.
Gold was slightly lower, with spot trading at $1,798.45 per ounce.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.