Asian shares slide with US yields on Pelosi jitters; Aussie drops

A man wearing a face mask, amid the coronavirus disease (COVID-19) pandemic, walks past a screen showing the Shanghai Composite, Nikkei and Dow Jones Industrial Average outside a company brokerage in Tokyo, Japan, February 14, 2022. REUTERS / Kim Kyung-Hoon

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TOKYO, Aug 2 (Reuters) – Asian stocks tumbled on Tuesday on worries about an escalation in Sino-US tensions with US House Speaker Nancy Pelosi starting a tour of Taiwan, raising concerns about the risk of a global recession.

Long-term US Treasury yields fell to 4-month lows, dragging US dollar lower, amid efforts to find safer assets after China threatened consequences in the case of Pelosi’s visit to the self-governing island that China claims as its own. territory. Crude oil also sank.

Meanwhile, Australian stocks fell slightly and the Australian dollar weakened after the central bank raised its key rate by 50 basis points as expected, with markets interpreting changes to the key statement. accompanying books are peaceful. read more

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Japan’s Nikkei (.N225) down 1.54%, while Taiwan’s stock index (.TWII) down 1.87%.

Chinese fries (.CSI300) down 2.47% and Hong Kong’s Hang Seng (.HSI) lost 2.71%.

However, the Australian equity standard (.AXJO) only 0.23% lower, after the previous 0.7% drop

MSCI’s broadest index of Asia-Pacific shares (.MIAP0000PUS) back 1.33%.

US e-mini stock futures point to a 0.44% lower restart for the S&P 500 (.SPX)down 0.28% overnight.

“We knew from the very beginning that[Pelosi’s trip]would be the driving force behind the risk-on sentiment in the region,” said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong. area.

“There will be a lot of speculation and uncertainty about the extent of China’s response in the short term.”

The week started with China, Europe and the US reporting weak factory activity, with the US decelerating to its lowest level since August 2020. Read more

Crude oil prices edged lower, with Brent futures falling to $99.27 a barrel on Tuesday after losing nearly $4 overnight. US West Texas Intermediate futures also fell to $93.26, extending Monday’s slide near $5.

Yields on the benchmark 10-year US Treasury note fell to 2.53% in commercial trading in Tokyo, the lowest since April 5, amid bets the decline could boost the Federal Reserve. The US Federal Reserve eases the tightening pedal. Bonds also benefited from the need for safety ahead of Pelosi’s visit to Taiwan.

That helped the US dollar slide to a low of 130.40 yen for the first time since June 6. The euro climbed as high as $1.0294, a level not seen since July 5.

The Taiwanese dollar fell to its lowest level in more than two years at less than 30 per US dollar.

Meanwhile, the Aussie was 0.51% lower at $0.69910, extending the 0.14% retracement following the Reserve Bank of Australia policy decision.

It hit its highest level since June 17, at $0.7048, in the previous session but that was after bouncing off a 26-month low at $0.66825 in the middle of last month.

“The Aussie has been underperforming other major currencies recently due to global growth concerns, so it really needs a hawkish surprise,” said Sean Callow, currency strategist at Westpac in Sydney. to bounce back from a two-year low,” said Sean Callow, a currency strategist at Westpac in Sydney.

“Instead, it leaves the RBA open to slowing the pace of tightening at future meetings, bringing AUD back below $0.70.”

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Reporting by Kevin Buckland; Additional reporting by Tom Westbrook; Edited by Robert Birsel

Our standards: Thomson Reuters Trust Principles.

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