SINGAPORE — Major Chinese stock indexes led losses as Covid concerns resurfaced, while Asia-Pacific markets traded lower on Wednesday. Oil futures rose after falling overnight.
Hong Kong’s Hang Seng index fell 1.37 percent, with heavyweights HSBC and CNOOC down 3.93 percent and 5.58 percent, respectively.
Markets in mainland China also fell. The Shanghai Composite lost 1.34% and the Shenzhen Component shed 1.08%.
“New rounds of Covid testing in Shanghai have increased fears of further lockdowns for China, which would have a ripple effect on other markets,” ANZ Research said in a note on Wednesday.
Shanghai will conduct mass testing in several districts after Covid cases were detected earlier this week, according to a statement on the city’s WeChat account.
About 11 cities in China have restricted local movement since Monday, up from five cities a week earlier, according to Ting Lu, chief China economist at Nomura.
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Japan’s Nikkei 225 fell about 1 percent and the Topix index fell 1.3 percent.
In South Korea, the Kospi fell 1.13%, but the Kosdaq gained 0.51%.
Australia’s S&P/ASX 200 was 0.34% lower.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.78 percent.
U.S. stock indexes initially fell sharply on Tuesday in the U.S. before rising in the afternoon. The Nasdaq Composite ended the session 1.75% higher at 11,322.24, while the S&P 500 rose 0.16% to 3,831.39.
The Dow Jones Industrial Average lost 129.44 points, or 0.4%.
There is no doubt that the recession is the biggest problem that the markets are struggling with right now.
Ben Snyder
Senior Strategist, Goldman Sachs
U.S. 10-year Treasury yields and 2-year yields reversed on Tuesday in the U.S., a closely watched measure that signals a recession. Longer duration yields tend to be higher than shorter duration yields. But the 2-year yield was last at 2.8426, above the 10-year yield of 2.8364.
“There’s no doubt that the recession is the biggest issue that the markets are struggling with right now, both the equity markets, fixed income and frankly the commodity markets,” Ben Snyder, senior strategist at Goldman Sachs, told “Squawk Box Asia’ on CNBC on Wednesday.
In central bank news, Bank Negara Malaysia is expected to release its monetary policy statement today. Analysts polled by Reuters expect the bank to raise interest rates by 25 basis points.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of peers, was last at 106.497, bouncing from below 105.3 earlier this week.
The Japanese yen was trading at 135.47 per dollar, strengthening from above 136 against the greenback on Tuesday. The Australian dollar was at $0.6796 after falling against a stronger US dollar.
“The deteriorating global economy is the main weight on the AUD,” Christina Clifton, an economist at the Commonwealth Bank of Australia, wrote in a note on Wednesday.
In morning trade in Asia, oil futures pared gains but were still trading higher. West Texas Intermediate crude rose 0.5% to $100. Brent crude rose 1.13% to $103.93.
U.S. benchmark oil fell as much as 10 percent, breaking through the $100 level on Tuesday in the United States, before settling 8.24 percent lower at $99.50 amid recession fears.
International benchmark Brent crude settled 9.45%, or $10.73, lower at $102.77 a barrel.
— CNBC’s Evelyn Cheng contributed to this report.
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