(Correct paragraph 7 bank name to ING)
HONG KONG v WASHINGTON (Reuters) – Asian stock markets reversed previous gains on Tuesday, dragged down by declines in Chinese markets, which were shaken by a new round of sanctions after fears of falling inflation helped boost broader sentiment in China. region.
Investors are now waiting for a congressional appearance closely watched by US Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen.
The negative sentiment seems to weigh on European stocks, as EUROSTOXX 50 futures are down 0.42% and FTSE futures are down 0.61%.
The S&P 500 futures fell 0.28%.
The largest MSCI index of Asia-Pacific equities outside Japan fell 0.76%, affected by a 1.42% decline in Chinese chips.
The United States and others, including the European Union, on Monday sanctioned Chinese officials in connection with human rights abuses in Xinjiang, and Beijing attacked European parliamentarians, diplomats, institutes and families with punitive measures.
“The fall could be due to sanctions,” said Iris Pang, chief economist for China’s largest at ING Wholesale Banking. “Greater pressure from international policy will affect asset markets.”
Jin Jing, an analyst at China Fortune Securities, said the sanctions affect risk appetite, especially for foreign investors who sold shares through Stock Connect.
Also, persistent concerns about tightening home policies continued to weigh on high-flying, high-rated sectors and stocks as investors became cautious.
Hong Kong’s Hang Seng Index also fell 1.62%, drawing traders’ attention to a hot market debut for Baidu, in which shares of the Chinese technology giant barely traded above their secondary listing price.
Beyond China, Asian stocks were mixed. Japan was down 0.61% and Australia was down 0.11%, both of which followed the overnight gains on Wall Street earlier, but emerging markets in the region performed better.
The Dow Jones industrial average rose 0.32%, the S&P 500 gained 0.70%, and the Nasdaq Composite added 1.23%, helped by a decline in Treasury yields.
The 10-year benchmarks last reached 1.6717%, down from 1.732% late on Friday.
Powell said in remarks prepared for a congressional meeting that the US recovery has progressed “faster than generally expected and appears to be consolidating.”
“The FOMC last week made it pretty clear what the Fed’s view of rates is … the next thing the markets will focus on is probably getting details from Yellen about additional infrastructure investment,” he said. said Alex Wolf, head of investment. strategy for Asia at JP Morgan Private Bank, referring to a statement by the Federal Open Market Committee.
The dollar gained slightly against a basket of six major currencies traded at 91,887, after falling 0.32% on Monday, while making gains against the kiwi, Australian and pound sterling.
The New Zealand dollar hit a three-month low after the government introduced taxes to reduce real estate speculation, a move investors thought could allow the central bank to keep interest rates lower for longer, with a lower risk of a real estate bubble.
Oil has also fallen amid heavy supply and is concerned that new pandemic curbs and the slow launch of vaccines in Europe will slow the recovery in fuel demand.
US West Texas Intermediate to the future of crude oil
(This story corrects paragraph 7 of the bank’s name to ING)
Alun John’s report to Hong Kong Chris Prentice to Washington; Additional reporting by Luoyan Liu to Shanghai; Editing by Sam Holmes and Gerry Doyle