Asian equities lose gains as China worries rise –

Asian equities lose gains as China worries rise

HONG KONG / WASHINGTON (Reuters) – Asian equities reversed earlier gains on Tuesday, weighed down by Chinese markets as investors took profit from a recent rally in some mainland companies, though easing inflation fears helped. to underpin the broader sentiment in the region.

FILE PHOTO: A man appears reflected on a stock trading board in Tokyo, Japan, on February 26, 2021. REUTERS / Kim Kyung-Hoon

Investors are now expecting a close appearance before Congress from US Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen later that day.

MSCI’s broader Asia-Pacific equity index outside of Japan fell 0.57%, hit by a 1.5% drop in China’s top-tier stocks.

Gary Ng, an economist at Natixis, said Chinese stocks had been ahead of other Asian markets recently, which meant they needed to undergo some kind of correction.

The late-night announcements of new sanctions didn’t help Chinese stocks either, despite analysts saying the markets had gotten quite used to such developments.

The United States and other countries, including the European Union, sanctioned Chinese officials on Monday for human rights abuses in Xinjiang, and Beijing responded with punitive measures against European legislators, diplomats, institutes and families.

Jin Jing, an analyst at China Fortune Securities, said the sanctions hurt risk appetite, particularly for foreign investors, who sold shares through Stock Connect.

Lingering domestic policy tightening concerns also continued to weigh on high-flying sectors and highly valued stocks as investors turned cautious.

Beyond China, Asian stocks were mixed after Wall Street gains on Monday, as investors applauded a breakout in the recent surge in bond yields.

The Dow Jones Industrial Average was up 0.32%, the S&P 500 gained 0.70% and the Nasdaq Composite added 1.23%.

Developed markets and emerging Asia also managed to digest a surprise move by Turkey’s president to replace the central bank governor with a critic of high interest rates.

“It doesn’t look like I’m going to see a lot of contagion from Turkey,” said Alex Wolf, head of investment strategy for Asia at JP Morgan Private Bank, citing “pretty strong flows into Asia.”

“Investors look less at emerging markets as a giant bloc.”

Benchmark 10-year notes were up slightly, last time yielding 1.6857%, but below 1.732% late on Friday.

“US risk assets were helped by a drop in Treasury yields at the start of the week. Yield movements will continue to be watched closely this week amid a series of US Treasury auctions and testimony from Treasury Secretary Yellen and Fed Chairman Powell, “ANZ Research said in a daily note.

Fed Chairman Powell said in remarks prepared for a congressional hearing on Tuesday that the US recovery had progressed “faster than expected and appears to be strengthening.”

The dollar index against a basket of six major currencies was almost unchanged in early Asian trading at 91,853, after falling 0.32% on Monday.

But oil fell amid ample supply and concerns that new pandemic restrictions and the slow launch of vaccines in Europe will slow the recovery in fuel demand.

US West Texas Intermediate Crude Futures they fell 1.28% and Brent crude futures fell 1.27%.

Reporting by Alun John in Hong Kong Chris Prentice in Washington; Additional information from Luoyan Liu in Shanghai; Edited by Sam Holmes


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