Asian stocks fall after US economic data, disappointing Chinese trade figures

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By Selena Li

HONG KONG (Reuters) – Asian stocks fell on Wednesday as investors failed to appreciate strong U.S. economic data and weaker-than-expected Chinese trade data pushed the yuan lower.

China’s export growth slowed in August as soaring inflation weighed on foreign demand and new COVID curbs and heatwaves disrupted production, reigniting downside risks to the economy .

Exports rose 7.1% in August from a year earlier, a slowdown from an 18.0% gain in July, according to official customs data.

The yuan weakened further, depreciating 0.36% to 6.98 to the dollar and approaching the 7 to the dollar mark. The Chinese authorities have expressed their concerns about the sharp declines in the currency.

However, China’s equity benchmark reacted muted to the news, rising 0.02% and recouping earlier losses despite concerns over new COVID restrictions in major mainland cities.

Following Wall Street’s losses, MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 1.6% in morning trade and Japan’s benchmark Nikkei average was down 0.95%.

Fixed-income markets came under heavy pressure, with yields on 10-year U.S. Treasuries hitting 3.365% on Wednesday, the highest since June 16. The Japanese yen, which has tended to weaken as US yields rose, was down 143.57 per dollar.

Overnight data showed the U.S. services industry rebounded in August for the second month in a row amid stronger growth in orders and jobs.

While this bolstered the view that the economy was not in recession, it also bolstered expectations that the US central bank would not slow the pace of interest rate hikes any time soon.

“Good news for the real economy has now become bad news for the market – for both the bond market and the stock market,” said Redmond Wong, Hong Kong-based Greater China market strategist at Saxo. Capital Markets.

Weaker-than-expected U.S. jobs data last week raised hopes that the Fed might be eyeing a soft landing with slower rate hikes, but “that hope has all but faded again. on the new set of numbers, he added.

“Investors we spoke to…have lost a bit of faith in the (stock) market,” Wong said, adding that they were showing renewed interest in high-quality bonds to earn cash flow from coupons.

The Australian S&P/ASX 200 index lost 1.34%. Economic growth in Australia in the second quarter accelerated, raising hopes that activity could withstand significantly higher interest rates and cost-of-living pressures.

Shares in Hong Kong fell 1.73%, led by the main tech index, which extended losses to 2.33% on fresh regulatory warnings.

Overnight, the U.S. Securities and Exchange Commission (SEC) warned that U.S. accounting firms risk breaking U.S. rules if they agree to conduct audits of New York-listed Chinese and Hong Kong companies seeking to avoid possible trade bans.

E-mini futures for the S&P 500 fell 0.51%, while pan-regional Euro Stoxx 50 futures fell 1.29%.

Other Asian currencies fell against the dollar as US bond yields soared.

In energy markets, crude oil prices stumbled on weaker consumption forecasts. U.S. crude fell 1.7% to $85.4 a barrel and Brent to $91.7, down 1.3% on the day.

Spot gold fell 0.5% to $1,693 an ounce.

(Reporting by Selena Li; Editing by Sam Holmes and Bradley Perrett)

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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