Asian shares mired by growth fears, pound gets Brexit boost

Tokyo — Asian shares barely moved on Wednesday after world stocks hit eight-week lows the previous day, on concern about global economic growth.

The pound stayed firm, however, on hope for a Brexit deal.

MSCI’s broadest index of Asia-Pacific shares outside Japan was flat, while Japan’s Nikkei average fell 0.4% and the Australian benchmark was up just 0.1%.

In China, the mainland benchmark Shanghai composite index shed 0.2% in choppy trade and Hong Kong’s Hang Seng added 0.3%.

“As uncertainty continues to prevail in financial markets across the world, many investors are staying on the sidelines until more clarity emerges in US treasury and Chinese markets,” said Yasuo Sakuma, chief investment officer at Libra Investments.

Benchmark US 10-year treasury yields touched a seven-and-a-half-year peak of 3.261% and those on 30-year bonds hit their highest in more than four years, but later fell back.

Some traders say comments on Tuesday by US President Donald Trump helped cool Treasuries yields. He said the Federal Reserve was going too fast in raising rates when inflation was minimal and government data pointed to a strong economy.

Italian government bond yields also fell from multiyear highs after Economy Minister Giovanni Tria pledged to do whatever is necessary to restore calm if market turbulence turns into a financial crisis.

On stock markets, Wall Street showed a mixed picture, with the Dow Jones industrial average falling 0.21% while the S&P 500 and the Nasdaq composite indices were little changed.

The MSCI all-country world index, which tracks shares in 47 countries, hit the lowest level since August 16 overnight. It last traded up 0.1% percent on the day.

The International Monetary Fund cut global economic growth forecasts for 2018 and 2019, as well as its US and China estimates for next year, saying the two countries would feel the brunt of the impact of their trade war next year.

The dollar dipped due to a fall in US bond yields after touching a seven-week peak against a basket of currencies. The dollar index last traded flat at 95.586.

Sterling continued to gain after a report that rekindled hope that Britain and the European Union are on the brink of a Brexit deal. It last traded up 0.1% at $1.3158.

“We can’t be too optimistic about the Brexit process, because even if a deal can be struck at an anticipated special EU summit in November, it has to get through the British parliament,” said Kengo Suzuki, chief forex strategist at Mizuho Securities.

The offshore yuan rose 0.1% to 6.9236 after falling earlier this week to as low as 6.9371 to the dollar, its weakest since mid-August.

Oil prices edged lower on Wednesday after the IMF lowered its global growth forecasts, but prices were somewhat supported as Hurricane Michael churned towards Florida, causing the shutdown of nearly 40% of US Gulf of Mexico crude output.

US crude oil futures dropped 0.5% to $74.61 a barrel and Brent crude futures eased 0.2% to $84.80 a barrel.

Gold prices stood flat as investors remained cautious after US treasury yields hit then retreated from multiyear highs.

Reuters