Asian stocks decline on debt ceiling and US-China relations. -On Wednesday, many Asian stock markets declined, followed declines in US stocks.
Asian stocks worries from many fronts
As an agreement to raise the debt ceiling stayed out of grasp. And worries of escalating Sino-U.S. tensions impacted sentiments majority of Asian stock markets declined on Wednesday. Matching declines in US stocks.
The Shanghai Shenzhen CSI 300 and Shanghai Composite indices declined by 0.6% and 0.5%, each. Revealing that Chinese equities trailed behind most of their competitors. The Hang Seng fell 1.1% as a result of falls in Chinese equities listed in Hong Kong.
Due to safety concerns, China has forbade the use of Micron Technology’s (NASDAQ:MU) processors in angering American politicians. The latest trade agreement involving the USA and Taiwan was also condemned by Beijing. As was the Group of Seven’s attitude toward the nation.
This significantly negated President Joe Biden’s claims that ties with China were about to get stronger. And raised worries about a resumption of a dispute over trade among the two biggest economies in the world.
Regional equities mostly dip on US- China trade potential
Local equities were also negatively impacted by China’s faltering post-COVID recovery. Having also had an impact on stock indices having access to the nation.
Australia’s ASX 200 index dropped 0.5%, while South Korea’s KOSPI shed 0.2%. Taiwan Weighted index saw no change.
The Nikkei 225 of Japan fell 1.1%, while the larger TOPIX fell 0.5%, thereby retreating from the week’s previous 33-year peaks. After an outstanding 8-session surge, it was widely believed that Japanese equities were overdue to engage in profit-taking.
According to a Reuters survey, the Japanese economy’s slowdown will cause the Nikkei to essentially reverse its gains from May by year’s end.
The SET Index for Thailand increased 0.2% after falling to a 2-year bottom recently. But even after the military junta was unexpectedly defeated in a recent election. The markets were still nervous about the creation of a new administration. This Monday, the progressive Move Forward group declared that it has secured coalition-building deals with seven other political groups.
As U.S. politicians indicated little progress toward negotiating an agreement and preventing a debt default. Other Asian markets fell on Wednesday. This occurs before the due date for a U.S. default in early June, which may have disastrous effects on the world economy.
Overnight trade saw a decline in the Wall Street indices, which gave regional stocks a poor start.
A slew of weaker-than-anticipated industrial indicators from around the world also shook traders’ confidence in risky investments. As they became increasingly concerned about an impending downturn later in the year. Markets are now anticipating more monetary policy clues from the Fed’s May minutes of meetings, which are coming later today.
Kiwi falls on dovish RBNZ, Asia FX flat amid Fed minutes loom
As markets anticipated new clues on the economy’s direction from the minutes of the Fed’s May meeting. The majority of Asian currencies saw minimal movement on Wednesday, as the US dollar held onto recent gains.
Markets turned to the greenback as a safe haven as a result, both the dollar index and futures holding firm on Wednesday following overnight advances.
The Chinese yuan saw significant losses, hovering close to six-month lows after falling under the crucial 7 level to the dollar last week.
The likelihood of continuing the nation’s ultra-loose fiscal stance on Wednesday caused the Japanese yen to rise by 0.1 percent. But trade near 6-month lows compared to the U.S. dollar.
