Asian markets had a quieter day on Wednesday after the turmoil caused by US House Speaker Nancy Pelosi’s controversial visit to Taiwan.
Investors were in a cautious mood watching developments in Sino-US tensions after China reacted angrily to Pelosi’s trip to Taiwan, while Washington struggled to play down its significance.
China condemned the highest-level US visit to Taiwan in 25 years as a threat to peace and stability in the Taiwan Strait, responded with a series of military exercises, called the US ambassador to Beijing and announced the suspension of several agricultural imports from Taiwan. .
Read more: China hits Taiwan with economic sanctions as Pelosi visits
Shares in mainland China were little changed after posting sharp losses in the previous session.
Defense stocks rose, however, with an index tracking the sector jumping 4.55% as China’s military announced joint air and sea drills near Taiwan and missile test launches conventional in the sea to the east of the island.
The Shanghai Composite Index fell 0.7%, or 22.59 points, to 3,163.67, while China’s second-largest bourse’s Shenzhen Composite Index fell 1%, or 20, 98 points, up to 2,117.19.
Meanwhile, Hong Kong shares recovered in the morning to track gains in Chinese stocks trading on Wall Street, led by gains in technology stocks. An index that tracks major technology companies listed on the financial center rose 2.25%.
The Hang Seng Index it gained 0.4%, or 77.88 points, to 19,767.09.
Japan’s Nikkei index ended higher, recovering from the previous session’s losses, as investors scooped up shares of Daikin Industries and other companies that posted solid earnings.
Nikkei Stock Average gained 0.5% to 27,741.90, after falling 1.4% on Tuesday in its biggest daily loss in three weeks. The broader Topix rose nearly 0.3% to 1,930.77.
Risk sentiment was helped by the safe arrival of US House Speaker Nancy Pelosi in Taiwan, despite threats of action from China.
The Fed signals more rate hikes
Elsewhere in the region, shares were broadly higher, advancing as much as half a percent, while shares in Malaysia fell as much as 0.8 percent.
Indian stocks retreated with Mumbai’s Nifty 50 down 0.3%, or 48.55 points, at 17,296.90.
Globally, stocks were slightly lower as markets weighed the risks of Pelosi’s visit to Taiwan and comments from Federal Reserve officials talking about the possibility of more aggressive interest rate hikes.
MSCI’s benchmark for world shares was down 0.1% at 8:23 GMT, steadier after Tuesday’s slide that took the index off multi-week highs hit after a rebound in July.
In Europe, the benchmark STOXX 600 share index fell 0.1% after data showed business activity in the euro zone fell slightly in July for the first time since the start of the year past as consumers curbed spending.
US stock futures were little changed, after the S&P 500 fell 0.7% overnight.
Fall in the US dollar index
A trio of Fed policymakers signaled on Tuesday that there would be no respite in the tightening campaign aimed at taming the highest inflation since the 1980s, although it will push rates to a level that will more significantly slow economic activity.
Traders now see about a 43.5% chance that the Fed will hike another 75 basis points (bps) at its next meeting in September.
Benchmark 10-year U.S. Treasury yields rose 1.3bp to 2.755%, after rising 14bp on Tuesday, as Fed comments suggested more near-term rate hikes are on the way , since inflation has not yet reached its peak.
The U.S. dollar index, which measures the currency against six major peers, fell 0.25% to 106.17, having rebounded from a nearly one-month low of 105.03 on Tuesday .
Oil prices fell ahead of an OPEC+ producer meeting where producers are expected to hold output steady with limited spare capacity and amid fears that a slowdown in global growth will weigh on demand of fuel
Brent crude futures were down $1.34, or 1.3%, at $99.20 a barrel by 0815 GMT. West Texas Intermediate (WTI) crude futures fell $1.28, or 1.4%, to $93.14 a barrel.
Key figures
Tokyo – Nikkei 225 > UP 0.5% to 27,741.90 (close)
Hong Kong – Hang Seng Index > UP 0.4% to 19,767.09 (close)
Shanghai: Compound
New York – Dow
Reuters with additional editing by Sean O’Meara
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Sean O’Meara
Sean O’Meara is editor of Asia Financial. He has been a journalist for over 30 years, working on local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.
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