Asian stocks lose recovery from China quarantine period, inflation fears ease

A man wearing a protective mask, amid the outbreak of the coronavirus disease (COVID-19), looks at an electronic board displaying Japan’s Nikkei index outside a brokerage in Tokyo, Japan, March 7, 2022. REUTERS/Kim Kyung-Hoon

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TOKYO (Reuters) – Shares fell across Asia on Wednesday morning, extending their overnight losses on Wall Street, as fears of recession, inflation and higher oil prices also boosted the safe-haven dollar.

Japan’s Nikkei is down 1.01% in early trading, while MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) is down 1.1%, weighed down by Australian shares (.AXJO), down 1.29%, and Korea’s KOSPI (.KS11) , down 1.57%.

Asian stocks ended the previous session on a positive track after China announced an easing of quarantine requirements for incoming passengers, in what some observers saw as the biggest easing yet of its “zero COVID” strategy. Read more

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But the effect faded on Wednesday.

“Inevitably, markets tend to overreact to these types of news,” said Carlos Casanova, chief economist at UBP in Hong Kong. “In order for that to be sustainable, we really want to see these actions materialize into an actual reopening.”

China’s blue-chip stocks (.CSI300), which hit a four-week high the previous day, lost 0.6% while the Hong Kong benchmark (.HSI) fell 1.3%.

The losses in Asia followed a turbulent day in US markets, with the S&P 500 down more than 2% after data showed US consumer confidence plunged to a 16-month low in June on fears that rising inflation could cause the economy to slow significantly. In the second half of the year. Read more

Renewed concerns about the possibility of a global recession sent investors to the dollar as a safe haven, and the dollar index held steady at 104.4.

The euro was down 0.6% against the dollar overnight, and was little changed in early Asia at $1.0529. The Japanese yen settled at 136.03 per dollar, not far from a 24-year low of 136.7.

The Japanese yen suffered as the Bank of Japan keeps monetary policy loose even as other major banks tighten, a point reiterated by Bank of Japan Governor Haruhiko Kuroda on Wednesday. Read more

The yield on the 10-year US Treasury was steady at 3.1697%.

Oil prices eased slightly after three sessions of gains, but tight global supplies supported the market. Nightly report indicated that Saudi Arabia and the United Arab Emirates are unable to increase production significantly in the near future.

Brent crude futures fell 0.53 percent on the day to $117.35 a barrel. US crude fell 0.37 percent to $111.39.

“I think spot prices are likely to remain high,” said UBP’s Casanova. “But I don’t think we will see major repercussions for other Asian asset classes, excluding potential bonds of some countries that are very sensitive to changes in energy prices.”

Spot gold was slightly higher, rising 0.15% to trade at $1,822.48 an ounce.

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Additional reporting by Sam Byford in Tokyo; Editing by Simon Cameron-Moore

Our Standards: Thomson Reuters Trust Principles.

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