(Bloomberg) — Asian shares fell on Wednesday as growth in China’s services sector slowed, underscoring concerns about a modest recovery in the world’s second-largest economy.
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Regional stocks fell 0.5% as stocks also fell in Japan, South Korea and Australia. Futures for benchmarks in the US and Europe are down.
Early losses in Chinese stocks deepened and the offshore yuan reversed gains as the Caixin China Services Purchasing Managers’ Index came in weaker than expected. The yuan’s fall came despite the central bank earlier maintaining support for the currency in its daily fix.
“This is a renewed focus on slowing growth and the recent uptick in geopolitical anger,” said Saru Sanana, market strategist at Saxo Capital Markets.
In Japan, after news that the e-commerce giant made a move to list its online brokerage unit, Rakuten Group Inc. Stocks fell. The stock fell as much as 2.9% before reentering positive territory amid market concerns about its debt levels.
The two-year Treasury yield fell four basis points to 4.9% as trading resumed on Wednesday following the Independence Day holiday in the US. The 10-year yield was 3.84%.
The two-year yield on Monday hit the 10-year rate at its biggest since last March, when the key 2s10s segment of the yield curve became the most inverted since the 1980s.
The yen was steady on the strong side of the 145 level against the dollar on Wednesday, after weakness fueled unease among policymakers in Tokyo. The Australian dollar, sensitive to China’s outlook, fell following the release of PMI data.
Elsewhere, oil weakened by more than 2% on Tuesday on Saudi Arabian and Russian production cuts. Traders are awaiting critical commentary from the Saudi energy minister. Gold changed little.
After US stocks rallied strongly in the first half of the year, investors now worry that higher rates and a poor economic backdrop will limit gains from here. In cautionary notes, Goldman Sachs Group Inc. Strategists wrote that it is too early to rule out the risk of higher interest rates on equities.
Not everyone is dark.
“As we approach a recession, we want to be a more conservative, high-quality tilt,” Tai Hui, chief market strategist for Asia Pacific at JPMorgan Asset Management, told Bloomberg Television. “But once the economy, once all the bad news is out, I think that’s where equities will really shine.”
And looking ahead, Friday’s US non-farm payrolls report will be a key event for markets, providing clues on the path of monetary policy.
Highlights of this week:
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Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday
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The OPEC international seminar, with speakers including OPEC+ oil ministers, begins in Vienna on Wednesday
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The FOMC will release minutes from its June policy meeting on Wednesday
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New York Fed President John Williams in a “fireside chat” at the Federal Reserve Research Association’s meeting at the New York Fed on Wednesday.
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US Initial Jobless Claims, Trade, ISM Services, Jobs, Thursday
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Dallas Fed President Lori Logan speaks on a panel about policy challenges for central banks at Thursday’s Zebra meeting.
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US unemployment rate, non-farm payrolls, Friday
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The ECB’s Christine Lagarde addresses an event in France on Friday
Some key moves in today’s markets:
Shares
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S&P 500 futures were down 0.1% as of 1:29pm Tokyo time.
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Nasdaq 100 futures fell 0.1%
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Japan’s TOPICS fell 0.2%
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Australia’s S&P/ASX 200 fell 0.4%
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Hong Kong’s Hang Seng fell 1.4%
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The Shanghai composite fell 0.5%
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Euro stocks 50 futures fell 0.2%
Coins
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0877
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The Japanese yen was little changed at 144.48 per dollar
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The offshore yuan fell 0.2% to 7.2397 per dollar
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The Australian dollar fell 0.1% to $0.6683
Cryptocurrencies
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Bitcoin rose 0.2% to $30,862.37
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Ether fell 0.2% to $1,938.51
Bonds
goods
This story was produced with the help of Bloomberg Automation.
–With assistance from John Cheng.
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