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Asia stocks are at their 2021 lows ahead of the Fed’s ruling, with China stabilizing

TV cameramen wait for the market to open in front of a big screen showing stock prices on the Tokyo Stock Exchange in Tokyo, Japan, October 2, 2020. REUTERS / Kim Kyung-Hoon

HONG KONG, Jul 28 (Reuters) – Asian stocks remained stuck at seven-month lows on Wednesday as markets continued to digest a storm in Chinese equity markets while currency markets remained calm and traders were wary of betting big ahead of a meeting’s outcome US Federal Reserve.

MSCI’s broadest index for Asia Pacific stocks outside of Japan (.MIAPJ0000PUS) lost 0.31% in morning trading. Hong Kong and mainland China markets stabilized after a sharp sell-off in the previous session and offset declines in other Asian countries.

Asian stocks fell in each of the previous three sessions as the regulatory crackdown on China rocked stocks in the tech, real estate and education sectors, hurting international investors. Continue reading

Chinese state finance media issued a first warning on Wednesday morning to calm down, and while Chinese stocks fluctuated in early trading, they did not repeat the sharp falls earlier in the week.

Chinese blue chips (.CSI30) were last flat after getting off to a volatile start to the day, and the Hong Kong benchmark (.HSI) gave up early gains and fell 0.24%. Both were still near the eight month lows.

The competitive Hang Seng Tech Index (.HSTECH) was last flat, even after a volatile morning, a day after it hit its lowest level since the index was created in July 2020. It is still around 40% below its February high.

Japan’s Nikkei (.N225) slipped 1.15% to a six-month low, while shares of SoftBank Group (9984.T), a major investor in Chinese technology, fell 3.68%.

US stock futures, the S&P 500 e-minis, were flat.

“China and the Fed are the two most important things for today,” said Tai Hui, chief Asia Pacific market strategist at JPMorgan Asset Management.

“We’re still trying to digest the news from China. What is new is how the Fed sees the latest round of (COVID-19) infections and whether it needs to readjust its view, ”he said.

The Fed policy meeting statement and a press conference by Chairman Jerome Powell are due at 2 p.m. EDT (1800 GMT).

Markets will pay close attention to clues as to when the Fed will cut government bond purchases and any new insights into its views on inflation and economic growth.

Tuesday’s losses in Asian stocks spread to other markets overnight, causing Wall Street to pull back a little from its record highs earlier in the week.

The Dow Jones Industrial Average (.DJI) lost 0.2% on Tuesday, the S&P 500 (.SPX) lost 0.5% and the Nasdaq Composite (.IXIC) lost 1.2%. Previously, the pan-European STOXX 600 Index (.STOXX) closed 0.54% lower.

After the US shutdown, Google parent Alphabet Inc (DemokratieL.O), Microsoft (MSFT.O) and Apple (AAPL.O) reported quarterly record earnings, although the smartphone maker’s shares slipped in after-hours trading, a slower growth forecast. Continue reading

In the foreign exchange markets, the US dollar was below its recent highs after a month-long rally, the safe haven yen rose and the risk-sensitive Australian and New Zealand dollars fell.

Analysts from CBA attributed the movements to the falling risk sentiment in the wake of the Chinese regulatory measures.

Benchmark 10-year Treasury yield rose slightly to 1.2478% from a US closing price of 1.244% on Tuesday.

Oil prices rose as industry data showed US crude oil and product inventories fell more than expected over the past week, outweighing concerns about the impact of rising COVID-19 cases. U.S. crude rose 0.73% to $ 72.17 a barrel and Brent crude rose 0.54% to $ 74.93 a barrel. The price of gold solidified above the key psychological level of $ 1,800 while Bitcoin rose about 1% and traded at $ 40,000 on both sides.

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Editing by Ana Nicolaci da Costa

Our Standards: The Thomson Reuters Trust Principles.

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