On Tuesday, stocks in Asia continued a decline seen on Wall Street, and long-term US Treasury yields also fell to a four-month low.
This saw the US dollar record declines against the Japanese yen as well as other currencies, with investors worried about the possibility of a global recession.
Market jitters
Other concerns in the market had to do with the visit of Nancy Pelosi, the US House of Representatives Speaker’s visit on Tuesday to Taiwan.
There was an escalation expected in the tensions between China and the US, as the former objected to the visit since it regards the self-regulated island as a province.
With commodity demand facing an uncertain outlook, there was a decline in Australian equities, which also weighed down the prices of crude oil.
Meanwhile, the Australian dollar was hovering close to its highest value since mid-June against its US counterpart, with the central bank most expected to hike interest rates by 50 basis points later in the day.
The equity benchmarks in South Korea and Australia both recorded losses of 0.3%, while a 1.17% decline was seen in Japan’s Nikkei 225.
1.06% drop was seen in Chinese blue chips and the Hang Seng index in Hong Kong fell 1.1%. A 1.68% decline was recorded in the stock index in Taiwan.
A 0.8% drop was also seen in the MSCI’s index of Asia-Pacific shares. The e-mini stock futures in the US indicated a lower start for the S&P 500 with a 0.31% decline, after overnight losses of 0.28%.
The start of the week
This week started off with Europe, China, and the United States all reporting declines in factory activity, with that of the US declining to its slowest pace since August 2020.
This pushed down crude prices, as Brent futures on Tuesday were down to $99.74, after overnight losses of almost $4.
There was also some easing in US West Texas Intermediate futures, which came down to $93.67, thereby extending their Monday slide of $5.
Market analysts said that the data in the last 24 hours had given further evidence of a slowdown in the global economy.
They said that US economic activity was slowing down and China’s reopening burst had also waned.
Currency movements
Tokyo trading saw the US 10-year Treasury yields come down to 2.53%, which is the lowest they have been since April 5th.
This was due to bets that an economic slowdown in the US would push the Federal Reserve to pull back from its aggressive rate hiking policy.
According to analysts, the safety-seeking demand before the Taiwan visit of the House Speaker had also benefitted bonds.
This allowed the US dollar to come down to 130.595 against the Japanese yen, which had not happened since June 6th.
As for the euro, it rose to a value of $1.0296, which it hadn’t done since July 5th. Moreover, the Taiwanese dollar also recorded decline against the US dollar to its lowest in two years.
The Aussie, on the other hand, was more subdued as it fell 0.26% to reach $0.7009.