SYDNEY (Reuters) – Asian equity markets were under pressure on Wednesday due to further declines in Chinese stocks and the yuan affected the entire region, while oil prices rose while the United States relied on its allies to stop the purchase of Iranian crude.
Chinese blue chips .CSI300 sank 2.2 percent to be a mustache above 13-month lows since a resolution of tensions between China and the United States remains a distant prospect.
MSCI's broadest index of Asia Pacific shares outside Japan. MIAPJ0000PUS lost another 0.6 percent after touching a two-year low on Tuesday.
Nikkei .N225 of Japan had been improving but soon succumbed to risk aversion and fell 0.3 percent.
European stocks should open without change, while future E-mini for the S & P 500 ESc1 lost 0.18 percent.
The fragile environment in Asia overshadowed gains in energy inventories after the news that Washington was pressuring the Allies to stop Iranian oil imports was known.
U.S. Crude CLc1 added 17 cents to $ 70.70, having climbed 3.6 percent overnight, while Brent LCOc1 rose 18 cents to $ 76.49 per barrel.
The increase in oil boosted the Wall Street energy sector by 1.4 percent .SPNY, making it the biggest winner in the S & P 500.
But the S & P .SPX only managed to add a 0.22 per percent overall, while the Dow .DJI rose 0.12 percent and the Nasdaq .IXIC rose 0.39 percent.
Confusion remained the motto of the US trade policy. UU
The US House of Representatives UU It overwhelmingly approved a bill to toughen foreign investment rules, spurred by bipartisan concerns over Chinese offers to acquire sophisticated US technology. UU
However, President Donald Trump also endorsed a measured approach to restrict Chinese investments in US technology companies. UU And he said a strengthened fusion security review committee could protect sensitive technologies.
"We continue to believe that a large-scale" commercial war "is still a low probability, although the likelihood of this happening seems to have increased," said JPMorgan economist David Hensley.
He noted that the latest White House tariff threats would cover more than 30 percent of US imports. UU., Which is equivalent to almost 5 percent of annual economic output (GDP).
"If all this happened, and the US business partners would retaliate, it would cause a major supply shock to the world economy, raise inflation and reduce growth."
RETURN TO YUAN WATCHING
In currency markets, trade-sensitive currencies, including Australian and New Zealand dollars, lost ground while the yen certainly found demand. The kiwi dollar reached its lowest level in seven months at $ 0.6812 NZD = D4.
The US dollar UU It remained broadly stable against a basket of currencies at 94,661, after bouncing from 94,171 on Tuesday. The euro EUR = was back at $ 1.1650, having met with a profit taking at a maximum of $ 1.1720 during the night.
However, the dollar could not sustain gains in the yen and retreated to 109.85 from a JPY = 110.12 early.
The dollar has been helped in part by recent gains in the Chinese yuan, which has generated speculation that Beijing was allowing its currency to weaken to boost exports.
The People's Bank of China (BPC) set the midpoint of the CNY = PBOC yuan at a six-month low of 6.5569 per dollar on Wednesday. That was 0.6 percent from the previous solution, but actually a bit firmer than market expectations.
However, the spot rate continued to fall and the yuan exceeded 6.6600 per dollar for the first time since December.
"The PBOC's preference could be to allow a moderate weakening, retreating if the depreciation pressures began to intensify, but that is a difficult balance to attack.The possibilities of a considerable depreciation have increased," said economists at Capital Economics in a note.
In commodity markets, gold was apparently no longer considered a safe haven by investors and reached its lowest level in more than six months.
The spot gold XAU = was the last at $ 1,255.93 having reached its lowest level since mid-December at $ 1,253.00.
Editing by Shri Navaratnam and Eric Meijer