Asian stocks struggled for direction Wednesday as concerns lingered over the impact of potential global trade restrictions. The dollar and Treasury yields steadied.
Equity benchmarks in Tokyo swung between gains and losses, and the yen climbed, while stocks fell in Hong Kong and were little changed Seoul and Sydney. Chinese shares declined as the yuan continued to weaken offshore despite a stronger-than-expected central bank fixing for its daily reference rate. A gauge of energy companies on the MSCI Asia Pacific Index of stocks advanced as oil consolidated above $70 a barrel following reports the US is pressing allies to halt imports of Iranian crude.
Investors focused on the simmering trade tensions are awaiting more clarity from the White House on its plans. President Donald Trump signaled he may take a less confrontational path toward curbing Chinese investments, backing down from earlier reports that the US would bar Chinese money in certain technologies. As traders fret over the immediate outlook they also have doubts about the longer-term path for US rates; the Treasury curve is the flattest in years, stoking fears about the prospect of a recession.
Meanwhile, in China, a deepening sense of unease continued to weigh on markets. The benchmark Shanghai stock index tumbled 20 per cent in just five months to enter a bear market. The yuan posted its longest losing streak in four years in Hong Kong.
Elsewhere, the pound was steady after weakening as a new Bank of England member spoke about the risks of raising interest rates too fast. Gold traded at its lowest price this year. Copper extended a drop to its lowest in almost three months amid trade uncertainty. –Bloomberg
