Singapore, Oct 12 (BNA): Asian shares slumped to two-year lows on Wednesday, weighed by signs that China had no immediate plans to ease tough coronavirus restrictions, while a relentless rise in the dollar and volatility rocked the British bond market and the invested pound sterling. Global. feelings.
After a turbulent overnight session, the pound pulled out of a two-week low, aided by a Bank of England (BOE) report that was ready to extend its bond-buying program beyond Friday, having previously upset markets by threatening to pull support this week.
Stoxx 50 futures contract is down 0.27%.
Stephen Innes of SPI Asset Management wrote: “The impromptu changes in UK economic policy leave more question marks than answers about credibility and are headwinds for sterling assets.”
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.50%, weighed heavily by China’s CSI300, which fell 1.40% while Hong Kong’s Hang Seng lost 2%.
The official newspaper of China’s ruling Communist Party warned, on Wednesday, that Beijing will continue its COVID-19 policies to avoid losing control of the local coronavirus outbreak.
Damian Bowie, chief macroeconomic strategist at Barrenjoey in Sydney, said the Bank of England had to work harder than usual to keep the risk premium in gold markets in check.
Sterling rose 0.4% to $1.1008 in late Asian trade but there are broader concerns about the direction of policy in Britain.
“It is very rare that I have seen such a misleading mix of political and political communications as presented by the new Conservative government,” former US Treasury Secretary Larry Summers said at the Citi investment conference in Sydney.
“I used to think that at the moment it was something that had to be universally understood that if you are doing a military intervention in a country, it is good to announce the deadline by which you are going to withdraw because it just provides a road map for you and the opposition and encourages them to wait for you.”
In Japan, the raging dollar breached 146 yen for the first time in 24 years, prompting authorities in Tokyo to pledge necessary steps in the foreign exchange market if necessary. The Nikkei was up 0.01% in the afternoon.
The Kospi in Seoul rose 0.52% after the Bank of Korea raised interest rates by 50 basis points for the second time since July, as expected.
The renewed strength of the US dollar also pushed the risk-sensitive Australian dollar to $0.6247, its lowest level since April 2020.
US inflation data on Wednesday and Thursday is expected to keep the Federal Reserve on course to raise interest rates.
Overnight, the S&P 500 and Nasdaq Composite were down 0.65% and 1.10%, respectively, although the Dow Jones Industrial Average managed to close at 0.12%.
The benchmark 10-year note slipped to 3.9289%, after opening at 3.9510%.
Brent crude futures were down 46 cents, or 0.5 percent, at $93.83 a barrel by 0410 GMT. US West Texas Intermediate crude was at $88.81 a barrel, down 54 cents, or 0.6%.
This was the third consecutive price drop as investors worry about lower fuel demand and the tightening of COVID-19 restrictions in China.
Spot gold rose 0.07% to $1,666.9 an ounce.
The International Monetary Fund on Tuesday lowered its 2023 global growth forecast from 2.9% to 2.7%, warning that pressures from inflation, war-induced energy and food crises and high interest rates could push the world into recession and financial market instability.
HF